How do fair housing laws intersect with lending practices?

• A. Lenders may discriminate based on financial status if the property is in a high-risk area.
• B. Fair housing laws apply to advertising only.
• C. FHA prohibits discrimination in real estate transactions including lending.
• D. Fair housing rules are unrelated to lending activities.

Answer: (C)

Fair housing laws extend to lending practices by making it illegal to discriminate in mortgage financing as part of real estate transactions. The Federal Fair Housing Act prohibits denying a loan, offering different terms, or requiring different conditions because of protected characteristics such as race, color, religion, sex, national origin, familial status, or disability. Lenders must evaluate creditworthiness using objective criteria and cannot base decisions on a borrower’s protected status or on neighborhood demographics. While advertising protections exist, the scope of fair housing laws is broader and includes the actual lending decision itself, ensuring equal access to credit.