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The fair financing regulations broadly prohibit two forms of discrimination: disparate therapy and disparate effect.

The fair financing regulations broadly prohibit two forms of discrimination: disparate therapy and disparate effect.

Both theories may apply in some instances. Disparate therapy takes place when a lender treats a customer differently due to a characteristic that is protected. Disparate treatment ranges from overt discrimination to more subdued variations in therapy that will damage customers and will not have to be inspired by prejudice or even a aware intent to discriminate. The Federal Reserve has made many referrals to your U.S. Department of Justice (DOJ) involving disparate therapy in rates where bank employees charged greater fees or interest levels on loans to minorities than to comparably qualified nonminority customers. These recommendations have actually resulted in many enforcement that is DOJ. These situations typically include circumstances by which bank workers had broad discretion to create interest levels and costs and may increase their compensation that is own by borrowers more. 4

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