Promotion

We are running an event promotion that will state 1/2 off origination or free appraisal. Do we need to incude any specific "disclosure" for these terms?

"1/2 off origination" - your origination fee - all required fees to originate - the greater or lesser of the two - including taxes and any insurance due?

I would say yes.

I agree with Randy as without disclosing the clarifying specifics, you would be opening yourself up to UDAAP risk.

We are simply advertising for a free appraisal when customer purchases a new home in a specific subdivision. I don't believe this is in violation of any regulation but do we have to further state what the value of the appraisal is in the additional disclosures? I also believe we would need to specify a timeframe of when this offer is good through.

We are simply advertising for a free appraisal when customer purchases a new home in a specific subdivision.

Sounds like redlining to me.

rlcarey, I didn't think of redlining. But I do see what you are saying. The customers who purchase a home in this subdivision would be the only ones benefiting from the ad. It would be better then to offer the free appraisal across the board to anyone who purchases a home no matter what area it's in. Thank you for that information.

rclarey, even though we would not be denying services we should still look at this as redlining because we are excluding a certain individuals based on their demographics and possibly not being able to afford the homes therefore, not being able to take advantage of the free appraisal?

Well, the question would be why this specific subdivision. What business necessity can you cite which would allow you to justify charging every other mortgage applicant an appraisal fee, if they choose not too or cannot afford to live in this small area of your community?

rclarey, I found out that there is going to be an open house for the new subdivision which is why marketing department is wanting to have the free appraisal.

Marketing is wanting to have flyers throughout all of the branch offices promoting this offer but the offer is only going to be available for home purchases in this specific subdivision...which for some customers isn't even close to some of our other branches/communities. So, to me it's pointless to have a flyer in a branch that isn't even close to this subdivision when the customers won't even benefit from the promotion...and more specifically...when we have branches in low income tracts. This subdivision is in a middle income tract I believe.

Now, could the branch that is the closest to the subdivision promote the offer of the free appraisal rather than having it branch wide?

You still have the problem with "why this subdivision"? What is in it for the bank. I probably have to assume that the bank is also financing the builder/developer of this specific development???? Regardless of the reason, I think it still represents potential redlining. If you can afford to pay for an appraisal in this subdivision, they why not everywhere?

Yes, the bank has been the financer for the developer...hence the promotion for the subdivision. I will decline the ad and suggest making this available to everyone if marketing wants to move forward with this.

Agree with Randy 1,000%.