During our recent Lending FDIC Exam, it was identified that we do not have a common ground from which our lending officers can begin when providing loans to our customers (i.e. a rate sheet). In light of this, the rates given to similar customers varied. I would like to know if other banks have faced the same issue and how it was addressed. If you developed a rate sheet, how did you go about developing the rate sheet and what type of results has it provided?

We developed one based on credit score and three tiers a couple of years ago. The FDIC loved it this exam and in auditing I have found that all officers at all the branches are consistant and we don't have great differences in rates now. Really good for fair lending. It is updated and e-mailed to all officers so they have it right at their figure tips to use.

Not having a rate sheet for all loan officers to price the loans sets you up for discrimination factors. If you have one loan officer pricing all loans to white males at 8% and another loan officer pricing the same loan under similar circumstances to females at 9%, how do you justify the disparity?

I have used rate sheets for as long as I can remember, and I started working for Commercial Credit in 1974.

Rate sheets are fairly simple to generate. You list your products and their varying terms, which should correlate with your lending policy, and then list the rates for those terms. They are for your loan officer's use only and they do not have to meet the advertising rules, UNLESS your loan officer starts using them as a marketing tool and showing them to the applicant when talking to them or gives them a copy to take with them.

As you create your rate sheet, plan how you're going to be sure all employees are using the one that is in effect. Paper is a poor choice because it has a habit of recycling from bottom drawers long after its printed rates have expired. If you have an intranet, that's the place for the rate sheet. By putting it online and setting your policy so that the online version is the only one that's approved, you minimize the risk of quoting or charging obsolete rates. This approach also allows convenient updates by authorized lenders at different locations.

Thank you very much to all for your responses. It seems that creating and using a rate sheet is the way to go.

NLC,

Can you elaborate on the credit score basis as well as the three tiers that you used?

Based on my understanding and observations, Comperson would only need rate sheets for consumer loans. I realize that rate sheets for non-consumer credits may be helpful as well, but I believe rate sheets for consumer loans only are required to help ensure compliance with fair lending regulations, etc. --- correct?

Fair lending regulations apply equally to business/commercial loans as they do to consumer loans. See the Commentary to 202.1.

ECOA (Reg. B) is a lending regulation, not a consumer regulation.


Take my examples above, that pricing scenario can as easily take place in a business credit as it can in a consumer credit.