Which situation exemplifies discrimination in mortgage lending?

The situation that exemplifies discrimination in mortgage lending is discrimination during the property appraisal process. Appraisals are meant to provide an objective value for a property based on various factors such as location, condition, and market trends. However, if an appraiser allows personal biases or stereotypes to influence their valuation—whether based on the racial or ethnic background of the homeowner, for instance—this constitutes discrimination. Such practices can lead to unfair lending decisions and perpetuate inequalities in home ownership and property value, which are critical aspects of the broader issue of systemic discrimination in housing.

Using credit scores to determine eligibility, evaluating employment status, and offering different interest rates to first-time buyers can all be considered standard practices in mortgage lending. These factors are typically based on objective criteria that relate directly to the borrower's financial readiness, rather than subjective biases. Therefore, they do not indicate discriminatory practices in the same way that biased appraisals can undermine fair access to mortgage lending.