| Course | MT431 Real Estate Finance and Ethics |
|---|---|
| Unit | Unit 9 |
| Paper type | Fair lending memo |
| Length | About 830 words, 6 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Business Administration |
| Updated | October 2026 |
Free sample paper for MT431 Unit 9
Three-Eighths and Three-Quarters: An MT431 Unit 9 Fair Lending Memo on Two Matched Borrowers
[Student Name]
Purdue University Global
MT431: Real Estate Finance and Ethics
Unit 9 Fair Lending Memo
[Instructor Name]
[Date]
Both applicants, the lender and all figures are composite; the average prime offer rate is a bracketed placeholder, the rules are summarized from the cited sources, and nothing here is legal advice.
TO: Compliance Officer, Ridgeline Home Lending FROM: Fair Lending Analyst RE: Pricing difference between Applicants A and B, same loan officer, same month
Facts
Applicant A and Applicant B each borrowed $310,000 on a 30-year fixed loan for a home purchase, with the same loan officer, in the same month. Their credit scores are 742 and 738. Both put 10 percent down. On the loan officer's worksheet, A's debt-to-income ratio was 37.3 percent. B's was 43.9 percent.
A received 6.5 percent with 0.25 points, an APR of about 6.57 percent. B received 6.875 percent with 1.0 point, an APR of about 7.02 percent. Against an average prime offer rate of [6.40] percent for the week of lock, A's reported rate spread is [0.17] and B's [0.62].
B is divorced and receives $1,150 a month in court-ordered child support, documented by the decree and twelve months of deposits. The loan officer's worksheet left that income out. With it, B's qualifying income rises from $6,274 to $7,424 a month and her ratio falls from 43.9 percent to 37.1 percent, slightly better than A's. The lender's pricing grid adds a rate and fee adjustment for ratios above 43 percent, which is how B came to be priced higher.
The difference costs B about $77 a month in payment, over $6,400 across seven years, plus $2,325 in additional points at closing.
Issue
Whether excluding B's child support income, and the pricing that followed, creates fair lending risk under federal law, and what the lender should do.
Law
The Equal Credit Opportunity Act of 1974, implemented by Regulation B, bars a creditor from treating applicants differently at any stage of credit because of marital status, age, sex, race, color, national origin or religion, because some of their income is public assistance, or because they have used their rights under consumer credit law. Regulation B specifically requires a creditor to consider alimony, child support and separate maintenance payments as income to the extent they are likely to be consistently made, and forbids discounting or excluding them for that reason (Rules concerning evaluation of applications, 2025).
The Fair Housing Act, enacted in 1968 and amended in 1988, prohibits discrimination in residential real estate-related transactions, including making or pricing mortgage loans, because of familial status, disability, race, color, national origin, religion or sex (Discrimination in residential real estate-related transactions, 2024). Marital status is protected under the first statute and not the second; familial status under the second and not the first.
The Home Mortgage Disclosure Act of 1975, implemented by Regulation C, is a reporting statute, not an anti-discrimination law. It requires lenders to report loan-level data, including the rate spread for this loan, which regulators and the public use to detect pricing patterns (Compilation of reportable data, 2025).
Regulation B does not leave the treatment of child support to judgment; it requires the income to be counted if it is reliable.
Analysis
The exclusion appears to violate Regulation B's income rule directly, regardless of intent: B's support was documented and consistent, and the worksheet left it out. Because child support is received mostly by divorced or separated women, a practice of excluding it also creates risk of discrimination on the basis of marital status and sex under the Equal Credit Opportunity Act, and on the basis of sex and familial status under the Fair Housing Act, if it falls more heavily on those groups. Whether this was one error or a pattern is the open question. Bhutta and Hizmo (2021) found that rate differences between groups were largely offset by differences in points once the full price was considered, which is why this memo compares rate and fees together and traces the gap to a specific input rather than assuming its cause. Bartlett et al. (2022) found that pricing differences can arise even without face-to-face contact, which means a worksheet field or a pricing grid can carry a disparity without anyone intending one.
Recommendation
First, reprice B's loan as if her income had been counted correctly, refund the excess points and adjust the rate or compensate for the higher payments to date. Second, review every file this loan officer closed in the past two years for excluded alimony, child support or public assistance income. Third, change the income worksheet so that these sources have their own required field, with a note on the Regulation B rule. Fourth, add a comparative-file test to the quarterly fair lending review, pairing applicants with similar credit and ratios and investigating any pricing gap above a set threshold, using the rate spread data the lender already reports.
References
Bartlett, R., Morse, A., Stanton, R., & Wallace, N. (2022). Consumer-lending discrimination in the FinTech era. Journal of Financial Economics, 143(1), 30-56. https://doi.org/10.1016/j.jfineco.2021.05.047
Bhutta, N., & Hizmo, A. (2021). Do minorities pay more for mortgages? Review of Financial Studies, 34(2), 763-789. https://doi.org/10.1093/rfs/hhaa047
Compilation of reportable data, 12 C.F.R. § 1003.4 (2025).
Discrimination in residential real estate-related transactions, 42 U.S.C. § 3605 (2024).
Rules concerning evaluation of applications, 12 C.F.R. § 1002.6 (2025).
Reading the MT 431 Unit 9 instructions
For MT431 Unit 9, two loan files with a pricing gap become a memo to the lender's compliance officer. Instructors expect memo form, usually facts, issue, law, analysis and recommendation, addressed to a compliance officer. A comparison of the two files, with credit, ratios, rate, points, APR and rate spread, belongs in the facts. The law section should state each statute with its year, regulation and protected bases, and keep them distinct: the Equal Credit Opportunity Act and the Fair Housing Act protect different bases, and HMDA is a reporting law. The analysis should trace the pricing difference to a specific cause and consider whether it reflects a pattern. Recommendations should be concrete actions the lender can take, including remediation for the affected borrower.
How the MT 431 Unit 9 example is put together
Laid out as a memo with a heading block, the sample states the facts in one comparison and computes what the pricing difference cost Applicant B. The issue is framed in one sentence. The law section takes each statute in turn with its bases and regulation, and notes which bases appear in only one of them. A highlighted line quotes the effect of Regulation B's income rule. The analysis applies that rule directly, then considers marital status, sex and familial status risk if the exclusion is a practice, with Bhutta and Hizmo on comparing full prices and Bartlett and colleagues on disparities without face-to-face contact. Four numbered recommendations close the memo, from repricing B's loan to comparative file testing.
MT431 Unit 9 rubric: what earns full points
Fair lending memos are usually graded on statutory precision, a clear causal analysis and actionable recommendations. Memos that list protected bases as if one law covered all of them blur the Equal Credit Opportunity Act and the Fair Housing Act and are marked down. Describing HMDA as an anti-discrimination law is a similar error. Rubrics reward citing the specific Regulation B rule on alimony and child support income. Credit goes to tracing the pricing gap to an identifiable input rather than asserting bias. Considering whether one error reflects a pattern shows compliance thinking. Recommendations that include remediation for the borrower, a file review, a process fix and ongoing monitoring score highest. Memo format and correct citations support the grade.
MT431 Unit 9 help: mistakes that cost points
Weak fair lending memos often conclude that discrimination occurred without identifying what caused the pricing difference. Another frequent error lists race, sex, disability and marital status together under one statute. Students commonly call HMDA a fair lending law rather than a reporting requirement. The Regulation B income rule, which decides this case, is often missed entirely. Recommendations tend to be general, such as more training, with no remedy for the affected borrower. Some memos are written as essays rather than in memo form. Before submitting, recompute Applicant B's ratio with every documented income source included. If the result changes her pricing tier, the memo has found its cause, and the recommendations should start with fixing her loan.
Get an MT431 Unit 9 example written to your instructions
Two applicant files or a fact pattern, the memo format expected and the rubric are enough for Unit 9. The free first fair lending memo, back within 24-48h, prices the difference between borrowers, assigns each protected basis to the statute that actually covers it, and closes with remediation aimed at the pattern. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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MT431 Unit 9 questions, answered
How do ECOA and the Fair Housing Act differ?
ECOA covers all credit, not just housing, and protects bases including race, color, religion, national origin, sex, marital status, age and receipt of public assistance income. The Fair Housing Act covers housing and residential lending and protects race, color, religion, sex, national origin, disability and familial status. A mortgage case can raise both, on different bases.
Can a lender ignore child support income?
Regulation B bars a creditor from discounting or excluding income because it comes from alimony, child support or separate maintenance. The lender may still consider whether the payments are likely to continue, for example by reviewing the court order and payment history. Excluding the income without that assessment, as in the sample, is the problem the memo identifies.
Does the MT431 memo need to prove the loan officer intended to discriminate?
Not necessarily. Disparate treatment can be shown by comparing similarly qualified applicants who received different terms, with intent inferred from the pattern and the weakness of the stated reason. Disparate impact, a separate theory, targets neutral policies with unjustified discriminatory effects. State which theory your analysis relies on and why. Matched-file comparisons of the kind in the sample support disparate treatment most directly.
Where can I find a free MT431 Unit 9 sample paper?
This page holds the full MT431 Unit 9 memo, tracing a pricing gap between two matched borrowers to excluded child support income.
Which rule decides the case in the MT431 Unit 9 sample?
Regulation B, which requires lenders to count alimony and child support as income when the payments are likely to continue.