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#2259220 - 09/02/21 09:11 PM Requiring a deposit acct as a condition of a loan
Helpcompliance Offline
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Joined: Mar 2015
Posts: 31
Kentucky
We are considering implementing a new condition when applying for a consumer loan. We would like to require the individual to open or have a deposit account (checking or savings) with the Bank in order to be eligible for a consumer loan. Do any regulations prohibit this? Any insight or advice anyone may have on this topic would be greatly appreciated.

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#2259221 - 09/02/21 09:15 PM Re: Requiring a deposit acct as a condition of a loan Helpcompliance
rlcarey Online
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rlcarey
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Posts: 77,591
Galveston, TX
No, but you have to look at any disparate impacts that might have on demographics within your customer base that might not typically maintain a deposit account. Also, since most banks are flush with deposits and are struggling to make loan, why is this a good marketing ploy?
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#2259222 - 09/02/21 09:15 PM Re: Requiring a deposit acct as a condition of a loan Helpcompliance
M Cockrell Offline
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M Cockrell
Joined: Jan 2003
Posts: 1,017
Dallas, TX
No prohibition of which I'm aware; however, you cannot condition loan approval upon auto-debit from the DDA.

You can incentivize them (e.g., 1/4 point rate discount) to have the loan payment debited from the DDA, though.
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#2259223 - 09/02/21 09:15 PM Re: Requiring a deposit acct as a condition of a loan Helpcompliance
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,077
Illinois
Since its not an investment account, anti-tying rules do not apply. The only regulation to be aware of is Reg E 1005.10(e) which prohiibts you requiring automatic payments to the loan.

That being said, how much market research have you done? Every bank I've worked for as an employee or with as a consultant ended up with a bunch of expensive deposit accounts with $1.00 sitting in them doing nothing but eating into the bottom line.

Also, since this is a condition of extending credit, youshould also evaluate any potential disparate impact risks for fair lending.
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#2259228 - 09/03/21 08:14 AM Re: Requiring a deposit acct as a condition of a loan Helpcompliance
Rocky P Online
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Joined: Jun 2003
Posts: 7,261
Florida
And if the person closes the account, what does the bank plan on doing? In order to bump up the rate, they would need to use an adjustable note, with the trigger of maintaining an account.
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