Skip to content

Is this Discriminatory?

Question: 
If two individuals have equal credit and other factors and one is granted a loan due to a non-bank related personal or business relationship with a bank officer, is this considered discriminatory from a fair lending/HMDA standpoint?
Answer: 

Answer by David Dickinson: Sure that's discrimination (one got the loan and the other didn't), but it isn't illegal discrimination based on a protected class. Fair Lending laws indicate it is illegal to consider race, sex, marital status, religion, etc. Having a relationship with a bank officer is not a factor for illegal discrimination.

Answer: 

Answer by Randy Carey: David is correct. However, this could lead to a lot of explaining by the bank during a fair lending examination if it is not specifically defined within the credit underwriting policies and procedures. It still has an opportunity to present a disparate impact. For example, if all of your loan officers are a specific race, the chances are that most of their "relationships" are also with people of similar demographics. Without sticking to true credit underwriting standards you are opening the door for disparate impact and possible disparate treatment. IMHO - This is not a road that the bank should take.

First published on BankersOnline.com 4/30/07

First published on 04/30/2007

Filed under: 
Filed under lending as: 

Banker Store View All

From training, policies, forms, and publications, to office products and occasional gifts, it’s available here:

Banker Store

hot right now

image description

Looking for effective, convenient training on a particular subject?

BOL Learning Connect offers more than 200 courses ON-DEMAND or on CD ROM from AML to Reg Z and every topic in between.

Search Topics