We have had discussions at the bank about adjusting the LTV ratios down for HELOCs to potentially ease the risk associated with these loans. We have a feeling that the banking industry might be on the verge of another housing bubble and would like to reduce our potential losses if such an event occurs.

One area that we are trying to avoid is originating a HELOC where the first mortgage is not held at our financial institution. In order to mitigate this risk, we would like to charge a higher rate on these HELOCs to either encourage them to bring the first over to our financial institution or perhaps to their request to their primary bank. Are we able to do this? Obviously, I don't want to get into any fair lending issues or UDAAP violations. The majority of these individuals would not have any other banking relationship with us except for the HELOC they have applied for.

Sounds like relationship pricing. I am not sure what having the first lien mortgage at the bank really buys you though. They are going to stop paying you first.