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#2228734 - 01/10/20 03:42 PM Matching Loan Rates from Competitor
2old2care Offline
Platinum Poster
Joined: Oct 2006
Posts: 712
PA
Worried about Fair Lending and UDAAP....
so, can we match loan rates from competitors on consumer loans - both secured (by residence) or unsecured? If a customer comes into the bank with an advertisement or LE from a lender in our market area and the rate is lower, can we match? Does the fact that we do risk based pricing affect this decision?

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#2228738 - 01/10/20 03:54 PM Re: Matching Loan Rates from Competitor 2old2care
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,225
Galveston, TX
Just my personal opinion, but a bank is not Home Depot. A bank should be pricing their products based on making the returns that the bank requires to meet their financial goals. If you are uncompetitive, then your overall pricing should be reviewed. Then the question is who shops the most for loans - what are the demographics of those people. If you end up with outliers - is a justifiable business purpose the fact that someone showed up with the ad in their hands versus the next person that did not?.
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#2228791 - 01/10/20 07:43 PM Re: Matching Loan Rates from Competitor 2old2care
2old2care Offline
Platinum Poster
Joined: Oct 2006
Posts: 712
PA
Eloquently put. I agree but the MLO's and Sales Associates tell me "everyone else is doing this." Maybe on deposits but I sincerely doubt it for loans. I know the examiners will review the loans made in a period of time and see if the rates match our advertised rates. If one or two show up with a better or worse rate, it will be reviewed.

Thank you for your input.

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#2228793 - 01/10/20 07:56 PM Re: Matching Loan Rates from Competitor 2old2care
Rocky P Online
Power Poster
Joined: Jun 2003
Posts: 7,650
Florida
A potential issue is certain demographics (banked people) have a tenancy to do more shopping around and are computer savvy compared to other groups who accept terms and conditions with minimal questioning. What you may end up with is a lot of concessions to non-minority classes - (a/k/a middle aged white guys), and few to others. This will be noticed by examiners.

In the late 1990's the DOJ took the Automobile dealers to court in the Chicago area. Seems a pricing issue where white males paid the least for cars, followed by black males, white females and the highest paid by black females. DOJ claimed race/gender discrimination. Auto dealerships claimed better information, bargaining, etc. caused the lower prices. Auto dealers lost.
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