NMLS Fair Lending Exam Practice
Questions And Correct Answers
(Verified Answers) Plus Rationale 2027
Q&A| Instant Download Pdf.
1. Which federal law is the primary statute prohibiting discrimination in
residential mortgage lending based on protected characteristics?
A. Truth in Lending Act
B. Equal Credit Opportunity Act (ECOA)
C. Real Estate Settlement Procedures Act
D. Home Mortgage Disclosure Act
ECOA prohibits discrimination in any aspect of a credit transaction based
on protected characteristics, including race, color, religion, national origin,
sex, marital status, age, and other protected factors.
2. Which regulation implements the Equal Credit Opportunity Act for
creditors, including mortgage lenders?
A. Regulation X
B. Regulation Z
C. Regulation B
D. Regulation C
Regulation B is the implementing regulation for ECOA and establishes
requirements for fair credit practices and anti-discrimination standards.
, 3. The Fair Housing Act prohibits mortgage discrimination based on
which protected class?
A. Credit score only
B. Employment history only
C. Race, color, religion, sex, handicap, familial status, and national
origin
D. Loan amount only
The Fair Housing Act protects individuals from discrimination in housing-
related transactions, including mortgage lending, based on specified
protected characteristics.
4. Which practice occurs when a lender intentionally treats applicants
differently because of a protected characteristic?
A. Redlining
B. Disparate impact
C. Disparate treatment
D. Risk-based pricing
Disparate treatment involves intentional unequal treatment of applicants
because of a protected characteristic.
5. Which practice involves denying or limiting lending services in specific
geographic areas because of the racial or ethnic composition of
residents?
A. Steering
B. Pricing discrimination
C. Redlining
D. Appraisal review
Redlining is an illegal practice where lenders avoid or restrict lending in
areas based on prohibited demographic characteristics.
6. A lender’s neutral policy that unintentionally harms a protected group
may create liability under which theory?
A. Intentional discrimination
, B. Disparate impact
C. Loan flipping
D. Fraud prevention
Disparate impact occurs when a neutral policy creates a disproportionate
adverse effect on a protected group without requiring discriminatory
intent.
7. Which federal agency is responsible for enforcing ECOA for many
mortgage lenders?
A. Federal Communications Commission
B. Department of Transportation
C. Consumer Financial Protection Bureau
D. Securities and Exchange Commission
The CFPB has authority to supervise and enforce ECOA compliance for
many financial institutions.
8. Under fair lending rules, a lender may not discourage an applicant
from applying for credit because of:
A. Debt-to-income ratio
B. Credit history
C. Protected characteristics
D. Loan purpose
Discouraging applications because of protected characteristics violates fair
lending requirements.
9. Which item is generally considered a prohibited basis under ECOA?
A. Loan term
B. Property type
C. Age, when the applicant has legal capacity to contract
D. Down payment amount
ECOA protects applicants from age discrimination unless a specific legal
exception applies.
Questions And Correct Answers
(Verified Answers) Plus Rationale 2027
Q&A| Instant Download Pdf.
1. Which federal law is the primary statute prohibiting discrimination in
residential mortgage lending based on protected characteristics?
A. Truth in Lending Act
B. Equal Credit Opportunity Act (ECOA)
C. Real Estate Settlement Procedures Act
D. Home Mortgage Disclosure Act
ECOA prohibits discrimination in any aspect of a credit transaction based
on protected characteristics, including race, color, religion, national origin,
sex, marital status, age, and other protected factors.
2. Which regulation implements the Equal Credit Opportunity Act for
creditors, including mortgage lenders?
A. Regulation X
B. Regulation Z
C. Regulation B
D. Regulation C
Regulation B is the implementing regulation for ECOA and establishes
requirements for fair credit practices and anti-discrimination standards.
, 3. The Fair Housing Act prohibits mortgage discrimination based on
which protected class?
A. Credit score only
B. Employment history only
C. Race, color, religion, sex, handicap, familial status, and national
origin
D. Loan amount only
The Fair Housing Act protects individuals from discrimination in housing-
related transactions, including mortgage lending, based on specified
protected characteristics.
4. Which practice occurs when a lender intentionally treats applicants
differently because of a protected characteristic?
A. Redlining
B. Disparate impact
C. Disparate treatment
D. Risk-based pricing
Disparate treatment involves intentional unequal treatment of applicants
because of a protected characteristic.
5. Which practice involves denying or limiting lending services in specific
geographic areas because of the racial or ethnic composition of
residents?
A. Steering
B. Pricing discrimination
C. Redlining
D. Appraisal review
Redlining is an illegal practice where lenders avoid or restrict lending in
areas based on prohibited demographic characteristics.
6. A lender’s neutral policy that unintentionally harms a protected group
may create liability under which theory?
A. Intentional discrimination
, B. Disparate impact
C. Loan flipping
D. Fraud prevention
Disparate impact occurs when a neutral policy creates a disproportionate
adverse effect on a protected group without requiring discriminatory
intent.
7. Which federal agency is responsible for enforcing ECOA for many
mortgage lenders?
A. Federal Communications Commission
B. Department of Transportation
C. Consumer Financial Protection Bureau
D. Securities and Exchange Commission
The CFPB has authority to supervise and enforce ECOA compliance for
many financial institutions.
8. Under fair lending rules, a lender may not discourage an applicant
from applying for credit because of:
A. Debt-to-income ratio
B. Credit history
C. Protected characteristics
D. Loan purpose
Discouraging applications because of protected characteristics violates fair
lending requirements.
9. Which item is generally considered a prohibited basis under ECOA?
A. Loan term
B. Property type
C. Age, when the applicant has legal capacity to contract
D. Down payment amount
ECOA protects applicants from age discrimination unless a specific legal
exception applies.
