Ethics · 18% of the SAFE examhard
Correct answer: Disparate impact — a facially neutral policy has a disproportionate adverse effect on a protected class
This is classic disparate impact: the $100,000 minimum applies to everyone (facially neutral) but disproportionately excludes minority communities with lower property values. The lender may not have intended to discriminate, but the EFFECT is discriminatory. The lender could defend with business necessity (e.g., loans under $100K are unprofitable) but must also show no less restrictive alternative exists (e.g., a lower minimum). If a less discriminatory alternative achieves the same business goal, the policy is illegal.
CRAM ARCADE has the full NMLS question bank, timed practice exams, focus drills on your weakest category, flashcards and spaced repetition. No credit card.
Start studying free