Not saying it is a likely risk, just a risk that should be considered. Say, for example, in their market a majority of the self-contractor borrowers are minorities (or any other protected class). Now there is a distinct possibility that your policy, even applied without regard to race, may have a negative impact requiring larger reserves for minority borrowers. I'd want to see a risk assessment for the policy change that demonstrates consideration of the possibility of disparate impact (and to your point, probably assesses that risk as very low). To me, sound fair lending governance says ANY loan policy change should consider all possibilities of fair lending exposure.
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Jim Bedsole, CRCM, CBA, CFSA, CAFP
My posts - my opinions