We are thinking about offering an unsecured, 60-month home improvement loan at 9.99% with a minimum amount of $2,500.00 and a maximum amount up to $12,000.00. In addition, the applicant must have a credit score of 700 or better and the remodeling work must be done on the homeowner's primary residence. The purpose of the loan will be stated as home improvement by the applicant and no documentation/proof of the work will be required unless the amount requested is greater than $5,000.00. In this case, the proceeds will be paid to the contractor, or if the work is being done by the applicant themselves, then a materials estimate must be provided. By offering such a product, an applicant may have access to the funds faster than ordering an appraisal on a secured loan. We currently have a regular, unsecured, 36-month regular loan at 16.00% with a minimum of $1,000.00 and a maximum up to $5,000.00, with a credit score of 700 or better. I want to make sure that these two different products are not construed as unfair because no documentation is required on the HIL product unless the amount warrants it. An applicant can say it is for home improvement just to get a lower rate. Does anyone else have similar products? Thanks in advance!

What are the demographics of your homeowners versus a non-homeowners. Basically you have two unsecured loan products where the only qualifying difference is owning a home. You need to make sure that factor is not a proxy for discriminating on a prohibited basis.