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#1130851 - 02/17/09 04:47 PM Home Equity - Rate buy-down?
CalifDreamin Offline
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CalifDreamin
Joined: Mar 2002
Posts: 2,220
Far from Calif
We have a customer who has a home equity loan at another bank. He'd like to refinance that with us, and has asked if he can buy down the rate. Are we allowed to do that on a home equity so long as it doesn't exceed the 3% (we typically don't have any fees on our home equity loans)?
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#1130902 - 02/17/09 05:34 PM Re: Home Equity - Rate buy-down? CalifDreamin
swiggles Offline
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swiggles
Joined: Aug 2001
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The Finance Code of the state of Texas does allow points on this type of loan. But the constitution restricts the total fees to 3% of the total loan amount. Is the debate still ongoing as to whether points is a fee or interest? If it's considered to be interest, then it would not be counted in the fee cap.

If you don't typically charge points, you might end up with a fair lending read flag, though you would be able to justify it to an examiner with the proper file documentation indicating that you honored the applicant's request in order to acquire the loan.
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#1130908 - 02/17/09 05:37 PM Re: Home Equity - Rate buy-down? swiggles
CalifDreamin Offline
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CalifDreamin
Joined: Mar 2002
Posts: 2,220
Far from Calif
Thanks for confirming what I thought.

The customer specifically asked to do this, so I was thinking we should have him sign something that evidences his desire to do this stating that it was not a requirement of the loan.
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