Fair Housing
A Minnesota mortgage lender requires all loan applicants in a particular zip code to provide 30% down payments, while applicants in other areas need only 5% down. If this policy is based on the racial composition of that zip code, it is called:
ARisk-based pricing (legal)
BRedlining (illegal)✓ Correct
CDifferential underwriting (legal)
DTargeted lending (legal)
Explanation
Requiring higher down payments from borrowers in minority neighborhoods based on the racial composition of those areas is redlining, an illegal practice. Even facially neutral lending criteria that are applied in a discriminatory geographic pattern violate the Fair Housing Act and Equal Credit Opportunity Act. Minnesota's Department of Human Rights investigates such practices.
Related Minnesota Fair Housing Questions
- The Minnesota Human Rights Act prohibits housing discrimination based on source of income. Which scenario would violate this law?
- Steering in real estate means:
- A landlord may legally ask a prospective tenant for all of the following EXCEPT:
- In Minnesota, which of the following is an example of discriminatory conduct under the Fair Housing Act?
- Under the Fair Housing Act, a lender who denies a mortgage application based on the racial composition of the neighborhood where the property is located is committing:
- The Fair Housing Act exempts which of the following from the prohibition on sex (gender) discrimination?
- Under the Fair Housing Act, which protected class was added by the 1988 Fair Housing Amendments Act?
- In Minnesota, which federal agency is primarily responsible for enforcing the federal Fair Housing Act?
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