Learn More - Click Here!

New Reply Thread Options
#2270671 - 05/19/22 08:01 PM Large loan concentration in Consumer RE
Anonymous
Unregistered

I know that banks are in the business of lending, but can a bank that does not sell loans on the secondary market and keeps them all in house, make the decision that it will only do real estate loans for its current customers without receiving scrutiny from Regulators.? We have a growing portfolio in this area, which IMO is extremely larger than any other concentration of loans we have. A large portion of our current applications for home purchase and refi are coming to us outside of our assessment area and they have no current banking relationship with us. I do not want to suggest this idea without thinking about redlining, underserved, UDAP, reputation risk etc. but I am uncertain as to where to begin my research. Any suggestions or advice is appreciated.

Return to Top Reply Quote Quick Reply Quick Quote
#2270678 - 05/19/22 08:59 PM Re: Large loan concentration in Consumer RE Anonymous
Rocky P Offline
Power Poster
Joined: Jun 2003
Posts: 7,379
Florida
I have a serious issue with lending exclusively to existing customers! Fair lending implications because you are not serving your community. Additionally, if your client base is homogeneous and not overly reflective of the community, there would be another issue. Minorities are generally considered as the unbanked, and the bank would have a policy with disparate impact!

The restrictions could better be with property outside the AA.
_________________________
Integrity. With it, nothing else matters. Without it, nothing else matters.

Return to Top Reply Quote Quick Reply Quick Quote
#2270712 - 05/20/22 03:39 PM Re: Large loan concentration in Consumer RE Anonymous
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,710
Bloomington, IN
The restrictions could better be with property outside the AA.

I agree with this except I would base it on your designated lending area which can be different from your AA and with the caveat that any exception to lend outside the lending area be few and far between and well documented with the mitigating factors warranting the exception.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top Reply Quote Quick Reply Quick Quote
#2270733 - 05/20/22 06:49 PM Re: Large loan concentration in Consumer RE Anonymous
Richard Insley Offline
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,049
Toano, VA
I agree with Rocky & Dan, but suggest you consider expanding eligibility slightly. In addition to residence within your designated lending area, it's reasonable to include those who reside elsewhere but have an existing economic interest within that same area.
_________________________
...gone fishing.

Return to Top Reply Quote Quick Reply Quick Quote
Quick Reply:
HTML is disabled
UBBCode is enabled




Moderator:  MagicCity, P*Q, Truffle Royale