Final answer:
The loan policy requirement is overt disparate treatment.
Step-by-step explanation:
The correct answer is B. The loan policy requirement is overt disparate treatment.
Disparate treatment refers to the intentional differential treatment of individuals based on a protected characteristic, such as race or ethnicity. In this case, the institution's loan policy charges a higher fee specifically for home improvement loans under $20,000, which disproportionately affects Hispanic borrowers. This is an example of overt disparate treatment because it involves intentional discrimination based on race or ethnicity.