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Problems if we vary from the loan rate sheet

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Question: 
We have a procedure built into our loan program, in which loans with a co-signer are assessed an additional .50% rate increase. Co-signed loans are set up for individuals with limited or no credit file, not for individuals with derogatory credit. The individual co-signing on the loan must have excellent credit. Recently we found a situation where the application was submitted as joint applicants (with joint intent completed), but we structured as a co-sign loan, rather than just looking at the loan as a joint loan, and so we assessed the additional .50% rate increase. Could this practice be considered discriminatory?
Answer: 

If the couple paying the higher rate is protected by the 9 items in § 1002.2, and this happened more than once, Yes, it could be a problem. Otherwise I think it is unlikely to surface as a potential issue. A key in finding and correcting compliance errors is in preventing them from happening again. So train, set controls and reviews and ensure it doesn’t become a pattern or practice or associated with any protected class.

First published on 08/22/2021

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