Management is looking to offer relationship pricing discounts for fixed rate mortgage loans. The idea is that if a client maintains $XXX in deposits, they can get an interest rate discount of say .25%. We will increase the rate if the client’s deposits drop below that level, or they close the deposit account. We know that we cannot properly disclose this for an ARM loan, but wonder if we can do the fixed rate loans? We would still need to provide the preferred rate discount for this event, though, like an auto debit discount (which we already offer), correct?
1) Could this be a fair lending issue - disparate impact? (Like having a minimum loan amount?)
2) For TRID Disclosures, we would disclose the discounted fixed rate - do we need to be concerned about the "what if" situation if deposits fall? It would be treated as a fixed rate?
3) Any other compliance concerns that we should consider?
4) This would be a one time discount - once lost, it's lost. We would not monitor ups & downs.
Thank you!