We have a 1st & 2nd lien on the books for an employee. The 1st started out as a bridge while they sold a house. Once it sold we applied the funds to the loan and modified the loan into payments. Since they sold the house as a loss we also did a 2nd lien at the time of modification to bring the 1st into LTV requirements. At that time, with both loans combined LTV was 90%.

They are now wanting to combine into one loan and have PMI with LTV 87%. In the long run, this is cheaper. PMI was denied due to the original 1st and 2nd lien not being originated at the same time.

We were going to do a loan policy exception of having a LTV of 87%. We have other borrowers that have a this LTV that we have waived PMI for. Will we run into any fair lending issues? Our other concern is now the employee is considered an Executive Officer so we don't want any Reg O issues.

Then you better have your comparables lined up for Regulation O and they better be 100% similarly situated.

Fair lending - that is really hard to say with so little information.