Sec 1-Page 43

1. Question

A borrower applying for a mortgage loan receives Social Security disability income, rental assistance benefits, and Supplemental Security Income. During underwriting, a new loan processor questions whether these benefits qualify as income from a public assistance program under ECOA.

Which statement best reflects the Regulation B definition of a public assistance program?

A) Only welfare-based cash assistance qualifies as public assistance income
B) Public assistance programs include only federal housing assistance benefits
C) Public assistance income applies only to temporary unemployment compensation
D) Public assistance programs include federal, state, or local programs providing continuing periodic income supplements, including Social Security and housing assistance benefits

2. Question

A lender denies a mortgage application because the borrower does not maintain a landline telephone listing in the applicant’s own name. During a fair lending review, regulators determine the lender improperly considered prohibited information.

Which ECOA principle applies?

A) Creditors may require telephone listings for all conventional mortgage loans
B) Telephone listings may be used only for FHA-insured loans
C) Creditors may not consider the existence or absence of a telephone listing in the applicant's name
D) Telephone listing requirements are permitted if disclosed in underwriting guidelines

3. Question

A borrower applies for a mortgage loan using part-time employment income and retirement pension income. The underwriter refuses to consider either source because management believes only full-time employment income should be used for qualification.

Which ECOA rule most directly applies?

A) Creditors may exclude all retirement and part-time income from underwriting consideration
B) Creditors may not discount or exclude income because of its source, including part-time employment or retirement benefits
C) Retirement income may be considered only for government-insured loans
D) Part-time income may never be used to establish repayment ability

4. Question

A borrower relies on court-ordered child support income to qualify for a mortgage loan. The underwriter reviews the payment history and supporting documentation to determine whether the income is likely to continue.

Under ECOA, which action is permissible?

A) Automatically reject all child support income as unreliable
B) Require the borrower to remove child support income from the application
C) Ignore all documentation relating to payment history
D) Consider whether the child support payments are likely to be consistently made

5. Question

A lender evaluates whether a borrower’s alimony income is likely to continue for mortgage qualification purposes. The underwriter reviews a written divorce decree, payment history, and the payer’s credit profile before making a final determination.

Which ECOA principle permits this review?

A) Creditors may consider factors related to the likelihood of consistent support payments, including written agreements, payment history, and the payer's creditworthiness
B) Creditors must automatically accept all alimony income without documentation
C) Support income may be considered only if paid directly by wage garnishment
D) Creditors may not review court documents involving support obligations

6. Question

A mortgage applicant has several jointly held accounts and a prior auto loan for which the borrower was contractually liable. During underwriting, the creditor reviews all repayment histories associated with those accounts.

Which statement best reflects ECOA requirements regarding credit history evaluation?

A) Creditors may consider all accounts the applicant used or for which the applicant was contractually liable
B) Creditors may review only mortgage-related credit accounts
C) Jointly held accounts may never be considered during underwriting
D) Credit history reviews are limited to open revolving accounts only

7. Question

A non-citizen borrower applies for a mortgage loan. During underwriting, the lender reviews documentation regarding the borrower’s permanent residency and immigration status.

Which ECOA principle allows the creditor to consider this information?

A) Immigration status may never be considered in mortgage underwriting
B) Creditors may consider whether an applicant is a permanent U.S. resident and may evaluate immigration status
C) Immigration status may be reviewed only after loan approval
D) Creditors may consider immigration status only for FHA loans

8. Question

A lender evaluates a mortgage application involving property located in a state with community property laws that may affect ownership rights and repayment obligations.

Which statement best reflects ECOA treatment of state property laws?

A) State property laws may not be considered during mortgage underwriting
B) Community property laws apply only after foreclosure proceedings begin
C) Creditors may consider or apply state property laws that affect creditworthiness
D) State property laws apply only to commercial loans

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