Which of the following statements is true regarding potential Regulation B violations?

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!

The statement that a financial institution may face violations if it discourages applicants is accurate because Regulation B, which implements the Equal Credit Opportunity Act (ECOA), prohibits creditors from discriminating against applicants on a basis that includes race, color, religion, national origin, sex, marital status, age, or because they receive public assistance. If a financial institution's practices, policies, or communications are perceived as discouraging potential applicants, especially those from protected classes, it can lead to violations of Regulation B.

This emphasis on not discouraging applicants is crucial for promoting fair lending practices and ensuring that all individuals, regardless of their background, have equal access to credit. Actions that could deter individuals from applying may violate the principles set forth in Regulation B, as they create barriers to accessing credit and financial services. Hence, discouraging applicants can be viewed as a form of discrimination, making it a violation of the regulatory framework established to support equal opportunity in lending.

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