indirect lending: risk base pricing

Posted By: Anonymous

indirect lending: risk base pricing - 09/16/02 06:28 PM

Our bank is interested in implementing risk base pricing for our indirect lending program (dealer loans). We do not want to implement risk base pricing for our direct lending program. My question is: Are there any fair lending issues with this practice. Thanks
Posted By: Dan Persfull

Re: indirect lending: risk base pricing - 09/16/02 07:40 PM

You are identifying this as a specific market segment and pricing it accordingly. As long as all applicants in this class are treated equally based on their risk scores, I do not think you have an issue. However, I would monitor it carefully to assure there is no “flipping”, in other words, the best customers are not being “guided” toward the better program.

What do other BOL users think about this?

Out of curiosity, why would you not want to “risk base” price your direct loan program?