What type of discrimination is displayed when a lender treats applicants differently based on race or gender?

Study for the CFPB Mortgage Compliance Test. Learn with detailed quizzes and flashcards. Understand the key concepts, regulations, and guidelines with comprehensive explanations. Get ready to ace your exam!

Disparate treatment occurs when individuals are treated differently based on protected characteristics such as race or gender. In the context of lending, if a lender makes decisions that favor one group over another due to these characteristics, it constitutes a clear violation of fair lending laws designed to protect against discrimination. This type of discrimination explicitly targets individuals and results in unequal treatment in the lending process, leading to adverse effects on the ability of certain groups to secure loans.

Other terms, like disparate impact, refer to situations where a policy or practice may be neutral on its face but disproportionately affects a certain group, without direct evidence of discriminatory intent. Overt discrimination indicates an open, explicit form of prejudice that can be evident in explicit policies or statements. Therefore, the most accurate classification for the scenario in question is disparate treatment, as it specifically highlights the intentional difference in how applicants are handled based on their race or gender.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy