Fair Housing
A Wisconsin lender who uses credit scoring models that disproportionately disadvantage minority borrowers may be challenged under:
ACERCLA
BDisparate impact theory under the Fair Housing Act and ECOA✓ Correct
CRESPA only
DThe Wisconsin Statute of Frauds
Explanation
Credit scoring models that produce disparate impacts on protected classes may be challenged under the Fair Housing Act and ECOA, even if the model itself does not explicitly reference race.
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Key Terms to Know
Fair Housing Act
Federal law prohibiting discrimination in the sale, rental, or financing of housing based on race, color, national origin, religion, sex, disability, and familial status.
SteeringAn illegal practice where a real estate agent directs buyers toward or away from certain neighborhoods based on the buyer's race, religion, national origin, or other protected characteristics.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
BlockbustingAn illegal practice of inducing homeowners to sell by claiming that the entry of minority groups will lower property values.
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