Skip to content
GeoDataVision
Thread Options
#2013040 - 05/08/15 05:53 PM Denial due to location of collateral
Piano Man Offline
Gold Star
Piano Man
Joined: Mar 2004
Posts: 442
Down South
Is their any fair lending regulations or CRA that allows the bank to not take a house as collateral strictly based on its location? There are not external factors in this decision like the real estate was constructed on a toxic waste site. They are basing this strictly on the road where the real estate is located. Thanks.
_________________________
Love so amazing, so divine; Demands my soul, my life, my all.

Return to Top
Fair Lending
#2013046 - 05/08/15 06:06 PM Re: Denial due to location of collateral Piano Man
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,832
Bloomington, IN
Sounds like redlining to me. What is the issue with the road the property is located on?
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#2013051 - 05/08/15 06:20 PM Re: Denial due to location of collateral Piano Man
ComplianceNerd Offline
Gold Star
Joined: Nov 2011
Posts: 376
Texas ...
Is the area out of your Assessment Area or Trade Area? Otherwise I'd agree - It could be considered Red Lining.
_________________________
Can't is not an option.

Return to Top
#2013067 - 05/08/15 06:36 PM Re: Denial due to location of collateral Piano Man
Piano Man Offline
Gold Star
Piano Man
Joined: Mar 2004
Posts: 442
Down South
It is within our assessment area. The issue is the properties in this location are generally lower quality homes. No other issues other than management doesn't like the location.
_________________________
Love so amazing, so divine; Demands my soul, my life, my all.

Return to Top
#2013070 - 05/08/15 06:43 PM Re: Denial due to location of collateral Piano Man
NSF, CRCM Offline
Gold Star
NSF, CRCM
Joined: Apr 2013
Posts: 410
VA
Yes this appears to be redlining to me as well.
_________________________
It is better to act cautiously beforehand than to suffer afterward.

The answers I give are my opinions. Not legal advice.

Return to Top
#2013082 - 05/08/15 07:01 PM Re: Denial due to location of collateral Piano Man
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,684
Cape Cod
If the property in question doesn't appraise well and you can't get a viable LTV, that's one thing, and I'd support it.

But if you just assume the value isn't there due to the neighborhood, I'd paint a big Scarlet Letter R for Redlining on your bank.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#2013122 - 05/08/15 08:35 PM Re: Denial due to location of collateral Piano Man
Rocky P Offline
Power Poster
Joined: Jun 2003
Posts: 7,420
Florida
Like the others - the property valuation is determined by the value assigned in the appraisal. The appraisal takes into account all factors, including quality of construction.

How would you explain to the examiner, "our LTV is generally capped at 90%, but in this case we didn't want the loan because we feel the homes are lower quality."
_________________________
Integrity. With it, nothing else matters. Without it, nothing else matters.

Return to Top
#2013131 - 05/08/15 08:55 PM Re: Denial due to location of collateral Piano Man
fmissle Offline
Platinum Poster
Joined: Jul 2007
Posts: 995
Pac NW
Huh. I thought redlining was a thing of the past and we just had to comply with all of this reporting and regulatory scrutiny for no reason.

Appears I'm wrong.

Return to Top
#2013169 - 05/09/15 11:11 AM Re: Denial due to location of collateral Piano Man
Rocky P Offline
Power Poster
Joined: Jun 2003
Posts: 7,420
Florida
The OCC Fair lending Examination Handbook http://www.occ.gov/publications/publicat...%20Handbook.pdf reflects a lot of redlining issues that examiners look at. The Redlining objectives start on numbered page 28, but are mentioned all throughout the book in evaluations and testing.

Although marked OCC, it is the same guide as the interagency fair lending guide, but includes additional sections on loan servicing/loss mitigation and HELOCS.
_________________________
Integrity. With it, nothing else matters. Without it, nothing else matters.

Return to Top
#2014276 - 05/15/15 01:30 PM Re: Denial due to location of collateral Piano Man
Dodge Offline
100 Club
Joined: Mar 2010
Posts: 241
Can you deny a consumer 1-4 family home loan due to the location of the house is "out of market". The bank will make a commercial loan real estate out of market.

Return to Top
#2014291 - 05/15/15 02:00 PM Re: Denial due to location of collateral Piano Man
NSF, CRCM Offline
Gold Star
NSF, CRCM
Joined: Apr 2013
Posts: 410
VA
Your policy should state how this will be handled to ensure consistency.
_________________________
It is better to act cautiously beforehand than to suffer afterward.

The answers I give are my opinions. Not legal advice.

Return to Top
#2014309 - 05/15/15 02:33 PM Re: Denial due to location of collateral NSF, CRCM
Rocky P Offline
Power Poster
Joined: Jun 2003
Posts: 7,420
Florida
Originally Posted By NSFW
Your policy should state how this will be handled to ensure consistency.

. . . . and needs to be consistently handled. There should be no (or documented limited) exceptions which are allowed by policy. Example, "no REM out of area". This might include a director's wanting a vacation loan in Colorado - unless in policy.
_________________________
Integrity. With it, nothing else matters. Without it, nothing else matters.

Return to Top