Federal Mortgage Law · 24% of the SAFE exammedium
Correct answer: Note on the application that the borrower declined to provide the information, then record race and ethnicity based on visual observation or surname
Under Regulation B (ECOA), when a loan involves a primary residence as collateral, lenders are required to collect government monitoring data including race, ethnicity, sex, marital status, and age. Applicants supply this information on a voluntary basis. However, if an applicant declines to provide this information, the lender is not permitted to simply leave the section blank. Instead, the lender must note on the application that the applicant declined, and then the lender must supply the demographic information based on visual observation and/or the applicant's surname. "Note on the application that the borrower declined t..." is incorrect because refusing to provide demographic information is not grounds to deny an application — this data collection is separate from creditworthiness. "Leave the demographic section blank and proceed with..." is incorrect because leaving the section blank when information can be gathered through observation is not compliant with Regulation B's requirements. "Deny the application until the borrower provides the..." is incorrect because the 30-day rule applies to requests for missing application information affecting a credit decision, not to voluntary demographic data collection.
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