Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

Under ECOA, a lender can ask about child support if what condition is met?

1. The applicant is receiving it

2. The applicant intends to use it for qualification

3. The applicant's spouse is involved

4. It is a required disclosure

The correct answer is: The applicant intends to use it for qualification

The correct response relates to the Equal Credit Opportunity Act (ECOA), which was designed to prevent discrimination in lending. When a lender asks about child support, it is permissible under ECOA if the applicant intends to use that income to qualify for a loan. This is because the lender needs to assess the applicant's financial situation comprehensively, and income sources such as child support can contribute to the applicant's overall ability to repay the loan. In this context, the lender is primarily concerned with the applicant's ability to meet their financial obligations. If the applicant plans to use child support as a part of their income for qualification purposes, it is relevant and necessary for the lender to inquire about it. The other options do not provide the right context for when a lender can ask about child support under ECOA. For instance, simply receiving child support doesn't automatically justify the inquiry for qualification purposes, nor does the involvement of the applicant's spouse or whether it is a required disclosure align directly with the ECOA stipulations regarding income verification for loan qualification. Hence, recognizing the intention behind the income use is central to why that particular answer is appropriate.