Real Estate Sales Exam Fair Housing and Ethics 4 — Questions and Answers
Question 1: Under the Fair Housing Act, a landlord with 5 units in a building where they also reside is:
- Fully exempt from the FHA for all units
- Exempt only if they do not use discriminatory advertising (Correct answer)
- Subject to all FHA provisions with no exemption
- Exempt from disability accommodation requirements only
Correct answer: Exempt only if they do not use discriminatory advertising
Owner-occupied buildings of four or fewer units qualify for a limited FHA exemption, but only without discriminatory advertising and without a broker.
Question 2: Which statement about the Equal Credit Opportunity Act (ECOA) is correct?
- It prohibits discrimination in mortgage lending based on race, color, religion, national origin, sex, marital status, or age (Correct answer)
- It applies only to government-backed loans
- It is enforced by HUD exclusively
- It only covers purchase loans, not refinances
Correct answer: It prohibits discrimination in mortgage lending based on race, color, religion, national origin, sex, marital status, or age
ECOA prohibits credit discrimination based on race, color, religion, national origin, sex, marital status, age, and receipt of public assistance.
Question 3: A seller instructs their agent: 'Do not show my home to anyone with an accent.' The agent's correct response is to:
- Follow the instruction to honor the seller-client relationship
- Refuse the instruction and explain it violates fair housing law (Correct answer)
- Show the home to all buyers but note the seller's preference
- Ask HUD for guidance before taking any action
Correct answer: Refuse the instruction and explain it violates fair housing law
An agent must refuse discriminatory instructions from a client, as following them would make the agent liable for fair housing violations.
Question 4: The maximum civil penalty for a first fair housing violation found by HUD is approximately:
- $5,000
- $16,000 (Correct answer)
- $50,000
- $100,000
Correct answer: $16,000
HUD can impose civil penalties up to approximately $16,000 for a first fair housing violation (amounts are periodically adjusted for inflation).
Question 5: A real estate agent posts a listing ad stating 'perfect for young professionals.' This phrasing potentially violates the FHA because it:
- Describes the buyer's lifestyle accurately
- Discourages families with children, a protected class (Correct answer)
- Uses an unapproved HUD term
- Violates truth-in-advertising standards
Correct answer: Discourages families with children, a protected class
Language that implies a preference for certain buyers can constitute discriminatory advertising under the FHA's familial status protections.
Question 6: The NAR Code of Ethics requires a REALTOR® to present all offers to a seller:
- Only offers that meet the seller's minimum price
- All written offers until closing unless the seller instructs otherwise in writing (Correct answer)
- Only offers with pre-approval letters attached
- Offers received within 72 hours of listing
Correct answer: All written offers until closing unless the seller instructs otherwise in writing
Article 1 of the NAR Code of Ethics requires REALTORS® to present all offers objectively and as quickly as possible unless the seller directs otherwise in writing.
Question 7: Redlining historically refers to:
- Marking high-crime areas on maps for buyer disclosure
- Denying services such as loans or insurance to residents in minority neighborhoods (Correct answer)
- Drawing boundaries for school district assignments
- Setting price ceilings in rent-controlled zones
Correct answer: Denying services such as loans or insurance to residents in minority neighborhoods
Redlining was the practice of refusing loans, insurance, or other services to residents of neighborhoods deemed racially undesirable.
Real Estate Sales Exam Fair Housing and Ethics 4
Under the Fair Housing Act, a landlord with 5 units in a building where they also reside is: