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#2300460 - 08/13/24 03:13 PM Mortgage-Relationship Pricing Discount
Tarhe Offline
Diamond Poster
Joined: Nov 2006
Posts: 1,462
California
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!

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Lending Compliance
#2300462 - 08/13/24 03:21 PM Re: Mortgage-Relationship Pricing Discount Tarhe
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 85,005
Galveston, TX
You are describing an ARM loan if the rate can increase based on an event. It does not have to be tied to an index. The same with your auto-discount if you raise the rate if they cancel the auto-payment. It will require a modified version of the early ARM disclosures under 1026.19(b) and notifications under 1026.20(c) prior to adjusting the payment.
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