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#1723518 - 07/26/12 12:27 PM Consumer Lending
SWFLBanker Offline
Junior Member
Joined: May 2012
Posts: 33
Back in 2010 my bank decided to stop doing consumer lending. We have had quite a few requests from existing customers for refinance on their mortgages. My bank is now kicking around the idea of offering a few closed end mortgage loan products to existing customers and employees only. I am questioning rather offering these products to only customers of the bank will we have and Fair Lending or UDAAP issues? We would not advertise the products but would like to be able to service our existing customer base. Also can we as a qualificaton for this program require that they customers of the bank for a certain period of time before appyling?

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Lending Compliance
#1723539 - 07/26/12 12:59 PM Re: Consumer Lending SWFLBanker
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 80,357
Galveston, TX
No one can answer these questions with certainy. Such actions may well present Fair Lending issues, but without an in-depth analysis it would be hard to say what that might be. i.e., demographics of your current customer base versus your market area, etc. Not making any consumer loans can't really do a whole lot for your CRA ratings.
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#1723639 - 07/26/12 03:08 PM Re: Consumer Lending SWFLBanker
SWFLBanker Offline
Junior Member
Joined: May 2012
Posts: 33
CRA is one of the issues of giving up consumer lending. I just joined the bank three months ago and was surprised to find that consumer lending was off the table. Compliance with all the Dodd-Frank rules I think was the deciding factor in dropping the program. Being located in Florida and the drop in property value resulted in a good portion of the home owners being underwater. It's hard to help those customers with all of the new regulations. We have customers with second mortgages with the bank who would like us to refinance the first and combine it with our second. At this point we just are not sure if it's cost effective to put in place all the pieces that would be required (i.e. PMI, escrow, etc).

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