Question

Which would NOT cause a compliance violation?

A. A lender sends an applicant a written adverse action notice 10 days after receiving a completed loan application.
B. A financial institution employee tells a female applicant to return next week to fill out a loan application, but allows a male applicant to fill out an application on the spot.
C. A financial institution employee asks Hispanic loan applicants about their residency status, but does not ask other applicants the same question.
D. A lender requires a spouse to cosign a loan, even though the applicant qualifies for individual credit.

Answer 1

Option A, where a lender sends a written adverse action notice within 10 days, does not result in a compliance violation, while the other options involve discriminatory practices that are forbidden by federal consumer protection laws.

Step-by-step explanation:

Among the options provided, A. A lender sends an applicant a written adverse action notice 10 days after receiving a completed loan application would NOT cause a compliance violation. Sending an adverse action notice within a reasonable time frame, here being 10 days, is compliant with the regulations set forth by laws such as the Equal Credit Opportunity Act (ECOA), which aims to prevent discriminatory practices in lending. The other actions mentioned, such as discriminatory treatment based on gender (B), targeting certain ethnic groups with additional questions (C), and unjustifiably requiring a spouse to cosign (D), would indeed constitute compliance violations as they are discriminatory practices that are forbidden under various federal consumer protection laws.