Management wants to create an interest only mortgage product for “affluent customers” only. (Defining qualified applicants as those with balances of $XXX,XXX!) The product won't be offered to regular bank customers. I see Fair Lending disparate impact implications. Management argues that if a customer does not have the deposit balances, they won't qualify and won't be offered an I/O product. There is no “business necessity” justification other than "other banks do it" and these other banks will steal our wealthy customers.

Any thoughts to support the argument that I can pass on?

I think you have pretty much covered it. Of course none of these will be QMs and I highly suggest that someone sit down with your safety and soundness EIC before launching this program because they tend to frown upon interest only consumer mortgage loans that are not temporary in nature. Not only that, but what sort of affluent person would want such a product? I thought the goal is to own your home and not have a rock hanging over your head - you might as well rent.

Thank you!!