Which of the following is a prohibited practice for MLOs in Hawaii?

Steering borrowers to higher-cost loans based on their race or ethnicity is considered a prohibited practice for Mortgage Loan Originators (MLOs) in Hawaii and under federal law as well. This practice constitutes discrimination and violates the Equal Credit Opportunity Act (ECOA) which prohibits lenders from discriminating against borrowers on the basis of protected characteristics, including race and ethnicity.

The prohibition against such practices is essential to ensure fair access to credit for all individuals, allowing them to receive loans that are appropriate for their financial situation without bias. MLOs are held to ethical standards that promote fairness and transparency in the lending process. Thus, engaging in any form of steering based on race or ethnicity is not only unethical but also illegal, reinforcing the importance of treating all clients equally and providing them with suitable loan options based strictly on their financial needs and qualifications.

To provide clarity on the other options, steering borrowers to lower-cost loans, discussing loan options, and providing assistance with loan applications are not prohibited practices as they involve acting in the best interest of borrowers without discrimination or bias. Such actions are aligned with the duties of an MLO to ensure clients have access to appropriate loan products and services.