Question

ACME Home Loans is a private lender with a strict policy of limiting originations to conventional qualified mortgages with minimum loan amounts of $300,000. To ensure compliance with this policy, loan originators are instructed to refuse to accept applications from consumers who want loan amounts of less than $300,000, or who have debt-to-income ratios of 44% or more. This policy is:

Answer 1

The correct option is e. Potentially unlawful under the disparate impact theory.

Step-by-step explanation:

Note: This question is not complete as the options are omitted. The options are therefore provided to complete the question before answering the question as follows:

a. Not a violation of any federal fair lending law

b. Potentially unlawful under the disparate impact theory

c. An example of disparate treatment of consumers

d. Legal if there is no discriminatory intent

e. Potentially unlawful under the disparate impact theory.

The explanation of the answers is now provided as follows:

Basically, disparate impact theory relates to the USs labor law and can be described as employment, housing, and other practices that disproportionately affect one group of persons with a protected trait over another, despite the fact that laws implemented by employers or landlords are ostensibly impartial.

For this question, despite that no discrimination may be intended, lending regulations that hurt creditworthy people who are members of a protected class may be prohibited.

The lending rules outlined in this issue, for example, could have a negative impact on younger applicants, breaking the Equal Credit Opportunity Act's (ECOA) restriction on age-based discrimination.

Therefore, the correct option is e. Potentially unlawful under the disparate impact theory.