What is the PLM’s role in fair lending and preventing discrimination?

• A. Allow lenders to set pricing without any monitoring
• B. Ensure lending practices comply with fair lending laws and monitor for discriminatory patterns
• C. Ignore demographic data in underwriting
• D. Promote only high-volume loans regardless of risk

Answer: (B)

The PLM’s role in fair lending is to ensure compliance with fair lending laws and actively watch for discriminatory patterns throughout the loan process. This means enforcing ECOA and FHA requirements, upholding internal policies, and applying consistent underwriting and pricing practices that aren’t tied to protected characteristics. The PLM analyzes HMDA data and internal reports to detect disparities in who gets approved, denied, or receives different terms or pricing, and then implements corrective actions such as updating procedures, retraining staff, or adjusting guidelines. Ongoing monitoring, audits, and documentation are essential to prevent discrimination and address any issues that arise. Choices that remove monitoring, ignore demographic data, or prioritize volume over risk would undermine fair lending and violate legal obligations.