We have a 2nd mortgage loan that is used for down payment assistance and is a companion loan to an in-house mortgage loan. To qualify for the loans, the applicant must be an LMI individual based on income or the property must be located in an LMI area. These applicants would not qualify for a traditional loan and most do not have the down payment. Is an anti-steering disclosure required for a 2nd mortgage loan? If so, do we have to give three sample options even though this is the only down payment assistance product we offer?

If this is the only option - how could you possibly steer them to another product to make a different return for the bank?

rl, Our bank is in a similar situation, in that, we are looking at a loan broker relationship where the lender makes the credit decision and we serve in the capacity of origination services with a flat fee. No matter the product, we make the same fee. For example, the applicant is
self-employed, the lender has only one product that we offer, would an anti-steering disclosure be required under 1026.36(e). The lender is requiring an anti-steering disclosure. What would it include as there is only one product available to the applicant. Management is asking do
we provide the anti-steering disclosure or ask the lender to remove the requirement from the agreement. Thanks.

Willing to try and help, but I have no idea who is doing what. You reference the bank, a broker and a lender involved in these transactions? I am not sure I understand the relationship the way this has been described.

Let me clarify, the bank will offer origination services only (loan broker relationship), the bank's lenders or loan brokers will work thru the
origination process, taking the apps, etc., the credit lender that we have an agreement (broker contract) with will be making the credit
decision on the application. The bank will be paid a flat fee based upon the loan amount. The bank lender or loan broker will be paid a flat fee
regardless of loan amount by the bank. Hope this helps.

If there is no other avenue that these applications can possibly take, then there cannot be steering. The first one of these that the bank decides to portfolio (because it is a good customer) blows that whole idea out of the water.

An in-house closing would be very rare indeed if ever as the terms and rates would not be in the best interest of the applicant. At present, there is no similar product offering for an in-house mortgage loan available to the applicant.

Thank you for the reply.

An in-house closing would be very rare indeed

Very rare means it is an option. You either offer it to everyone or no one.