We are looking at starting up a no closing cost program. A thought was to add .25 to the rate for loans of $200,000 or less and add .125 to loans above $200,000.

My thought is that this could be a fair lending issue, however it was brought up that loans above $200,000 will recover the closing costs quicker and therefore they could increase the rate by less than a lower loan amount.

Does anyone have any thoughts on this?

If you can substantiate the difference in a business case, it may fly.

Have you looked at how long your loans stay on the books? This validates the idea that the larger loan pays the costs back quicker. Is there a difference between the two loan cutoffs as to any early payment? Otherwise, how long does it take to recover the costs?

Is there a disparate impact based on this cutoff?