Not So Fair Lending?

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Question:

I am a finance broker for several financial institutions, and have agreements in place to do business with them. We currently do financing and refinancing on chattel loans with several investors. My contract with one of the institutions states that I will not solicit any of their customers for refinancing. My question is as follows: Would it be breaking the Fair Lending or Fair credit Laws to deny someone the opportunity to refinance through my organization because they, who came to me direct, are financed with a company I do business with currently? I have a lender that is asking me to do this to my customer, and I feel like this is wrong and do not want to participate in this activity. Is this against the law? Where could I find information on this to prove to the lender that this is an improper activity, and is not treating the customer fairly and equally?

Answer:

For information about this, look to the guidance on predatory lending issued by the federal financial regulatory agencies. There have been significant concerns about the damage to borrowers from loan flipping and loan churning. Both are defined as rapid refinances that may not be in the financial interest of the customer. To be certain of compliance with these regulatory concerns, your client bank has established some policies designed to restrict loan flipping. Perhaps you should take a page from their book!

First published on BankersOnline.com 3/20/06