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#2256712 - 07/14/21 08:49 PM Fair Lending Issues?
mnbanker09 Offline
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Joined: Jan 2018
Posts: 105
I feel that we have some fair lending concerns when a lender can offer a consumer mortgage loan and choose between either of the below (hypothethical) scenarios, based on customer's 'comfort level'. Is this common to structure pricing in this way--lower rate w/higher origination fee; higher rate with lower fee?

1) Rate @ 2.25%, Origination Fee: 1%
2) Rate @ 3.00%, Origination Fee: .25%

How would the consumer know the true price of the loan without providing an LE for both scenarios? TIA.

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Fair Lending
#2256718 - 07/14/21 09:09 PM Re: Fair Lending Issues? mnbanker09
InFairness, CRCM Offline
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InFairness, CRCM
Joined: Nov 2010
Posts: 568
USA
How would you know that the customer actually made the decision?
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#2256719 - 07/14/21 09:17 PM Re: Fair Lending Issues? InFairness, CRCM
mnbanker09 Offline
100 Club
Joined: Jan 2018
Posts: 105
Agree.

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#2256722 - 07/14/21 10:24 PM Re: Fair Lending Issues? mnbanker09
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 77,261
Galveston, TX
Well, would not not be delivering the anti-steering disclosure under 1026.36(e) if you were making such an offer?
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#2256726 - 07/15/21 12:55 PM Re: Fair Lending Issues? mnbanker09
Rocky P Offline
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Joined: Jun 2003
Posts: 7,238
Florida
If I'm understanding the question right.
There have always been customer options for buying down the loan rate, based on circumstances. Elderly have had a chance to accumulate savings, but may be at the waning years of their work life, and would use a higher origination fee to have lower permanent payments. Younger generation does not have the additional funds to put down, but are at the low end of their earnings. They could afford the larger payments.

Most lenders have the buydown as part of the pricing sheet and MLO's usually discuss with the borrower based on the available cash they have to put down. There should be minimal issues as long as the Orig. fee and buydown rate are validated and accurate, (e.g. 1 point = 1/4% lower rate) and the option is given to all.
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