Final answer:
When an applicant does not voluntarily provide ethnicity or race information and the application is made in person, the lender must note the information based on visual observation and surname as "Not reported/other" to comply with federal regulations.
Step-by-step explanation:
If a loan originator notes the applicant's ethnicity and race based on visual observation, the appropriate action to take, according to the information provided for government monitoring purposes, is to mark the option that says, "Not reported/other." This option can be denoted by a code or selection that is typically available on the loan application form. It is essential to respect the applicant's privacy and right to non-disclosure if they do not wish to furnish this information. In line with the Federal regulations, when an applicant does not voluntarily provide race or ethnicity information, and the loan application is made in person, the lender is required to note their observations regarding the applicant's race and ethnicity.
The reporting guidelines for collecting ethnicity and race information on certain types of loans are meant to ensure compliance with equal credit opportunity, fair housing, and home mortgage disclosure laws. It is crucial to remember that these regulations exist to prevent discrimination and to promote fair treatment in the lending process.