So hypothetically, if a jumbo loan program were being developed with the loan terms, LTV, DTI, credit score, etc., then maybe mgmt wants to add additional criteria such as a net worth number,. a personal liquidity number, a dollar amount of total loan relationship with the bank or an AGI over a certain amount (possibly above the DTI for the loan itself), why am I thinking these are fair lending issues and mgmt is not? I understand risk but what about adding PMI/reserves or something else internally to offset the risk? What about the interest rate itself being the main trigger to help offset risk? Am I losing my mind for looking at this one too long? I don't think I am!!

I am not sure what the concern is? You mean you want separate underwriting criteria for loans over $XXXXX? How jumbo are you talking about? What underwriting criteria that management is proposing specifically causes you heartburn when it comes to fair lending?

Hi Rclary-

My concern is that if we require additional criteria like the following:
-$1MM net worth
-$100 in personal liquidity
-Over $1MM in current loans with the bank
-AGI over $250,000

In my mind, if I am able to qualify for the a jumbo loan ($550M to $1MM) on only my credit score, DTI and basic underwriting qualifications, my concern is that these last 4 items (or at least the first 3) could be barriers to protected classes. This proposal was originally provided as part of a private banking product but we don't have a private banking division/program. Are these neutral credit requirements? The interest rate is already increased since it is in-house and not secondary market. Thanks for the input.

I have the same concerns about jumbo loans that exceed $510,400. My fear from the fair lending standpoint is that the bank establishes a product (that may have a better rate or term) that may exclude a protected class. Would this be a valid, fair lending concern?

Well, jumbos are usually priced higher and not lower. I could see that #3 might give you a little heartburn, plus that locks out any new high value customers. Do they have any statistical support for these parameters or did they just pull them out of a hat? I would be asking for the underlying research into the projected default rates based on these additional parameters. Otherwise, make your thoughts known in a documented manner and let them fall onto their own swords.

Duly noted! Thanks!