What question are creditors NOT permitted to ask when taking a mortgage loan application?

Creditors must adhere to strict regulations regarding the questions they ask during the mortgage loan application process, particularly to avoid discrimination and adhere to fair lending standards. The correct response to the question identifies that creditors are not allowed to inquire about whether an applicant receives child support, as this could be seen as a discriminatory question related to the applicant's family status.

In line with the Equal Credit Opportunity Act (ECOA), lenders should focus on the borrower's ability to repay the loan based on their financial status rather than their personal circumstances. While the income sources are relevant for assessing creditworthiness, asking if an applicant receives child support could imply bias against single parents or those with children, which the law seeks to prevent.

Conversely, asking about a home address, employment, and whether someone is required to pay child support are acceptable lines of questioning. These inquiries relate directly to the applicant's financial situation and ability to repay the loan, fitting within the guidelines of fair lending practices. Therefore, the core reason for restricting the question about receiving child support is to promote fairness and to ensure that all applicants are evaluated solely on their financial qualifications.