Citizenship for a Bridge Loan
Question: We are planning to send out a mailer for bridge loans. Because of the risk connected to the product, we want to require that the borrower is a US Citizen. Can we get in trouble advertising this way?
Answer: Yes. The requirement that the applicant be a US citizen could have a disparate impact on the market. For example, Hispanics and Ethiopians who may be permanent resident aliens would be discouraged by the ad - and excluded by the policy. If risk is the primary concern, you should be able to find a condition that does not have a disparate impact. In fact, if the loan is secured by real estate, your risk is already fairly low.
Copyright © 2005 Compliance Action. Originally appeared in Compliance Action, Vol. 10, No. 15, 12/05
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