In mortgage lending, which of the following actions is EXCEPTED from fair housing laws?

In the context of mortgage lending, refusing to approve a loan based on income and credit score is an action that is considered to be a legitimate practice that aligns with fair housing laws. This is because lenders are allowed to assess a borrower's financial capability when making lending decisions. Factors such as income and credit score are key indicators of a borrower's ability to repay a loan and are used by lenders to mitigate risk.

The other options reflect practices that would violate fair housing laws. For example, offering loans based on race, discouraging interest from certain demographics, or providing different loan terms based on location all constitute discriminatory practices that are illegal under fair housing regulations. These laws are designed to ensure equality in housing opportunities and prevent discrimination against individuals based on protected characteristics such as race, color, religion, sex, national origin, familial status, or disability. Therefore, refusing a loan based solely on objective financial criteria like income and credit score is appropriate and does not violate those laws.