I need some opinions and thoughts on this scenario. We use a pricing matrix for all consumer loans. More and more often we are having to issue counter-offers to the borrower due to the appraisal coming in lower than expected. The counter-offer is for a lower amount to stay under 80% and often the lowered loan amount causes the counter-offer to have a higher rate as well due to our pricing matrix. No issue so far, except we are having to redisclose all these loans and sometimes delay closings. So now Loan Ops and Underwriting have come up with the idea that they will counter-offer on the loan amount but keep the rate the same so they will not have to redisclose.
This will be an exception from the pricing matrix and doucmented, but I'm trying to think from a fair lending perspective. It actually benefits the customers in areas where real estate values have dropped since they get to keep the lower rate, but on the other hand it rewards customers for applying for a higher loan amount. (e.g. customer who applies for a $100 and gets dropped to $75 will have a lower rate than someone who applied directly for $75). Anyone have thoughts or concerns about this?
Last edited by Carolina Blue; 04/01/11 03:09 PM. Reason: Clarification and spelling