ABA Banking Journal - April 2012 - (Page 44)
ABA COMPLIANCE CENTER | INbOx
Can marketing produce fair-lending trap?
Q. Our commercial lender is putting together business development packets for physicians going through a hospital’s residency program. He wants to include special rates and discounted fees on mortgage loans. I have fair-lending concerns—in particular whether it may create disparate impact. Am I right to be concerned? A. You are always right to be concerned about fair-lending issues. But we’re not sure you have enough information to determine whether or not that this program presents any fair-lending concerns. On its face, offering a group of doctors a better rate and preferable terms does not mean that you are discriminating against other similarly situated applicants on any prohibited basis. It would, however, be prudent to know the answers to the following types of questions: • Are the doctors of all races, ethnicities, genders, and ages? • Are there residency programs at other hospitals with more minority doctors who are not being offered this program? Why not? • Why only doctors in this particular residency program and not other doctors who have completed their residency? • Is this program being offered at a hospital affiliated with a particular religious sect, such as a Catholic hospital? Or is it being offered at a secular hospital but not at hospitals with religious affiliations? Also, these actions would not by themselves make a case alleging any disparate impact. Depending on how the bank administers this program, and the answers to the above and similar questions, there may be a case for disparate treatment where similarly situated applicants are treated differently on a prohibited basis. Once you decide to begin this program—if you do—you will need to monitor it to ensure that there is no disparate treatment of similarly situated applicants. If you find that the only individuals who qualify for this program are white men, then you could have an issue. It’s unclear whether you will know that until the program has been in place for a while. (Response provided March 2012.) No 800 number required for transfers Q. We are transferring the servicing of some loans to another bank and are preparing the letters (Notice of transfer—24 CFR 3500.21). We do not have an 800 number. Must we obtain one? A. No—but, if your institution does not have an 800 (or other similar toll-free) number, you must be able and willing to accept collect calls at another number listed on the notice. Per Section 3500.21(d) (3)(iii), a Transfer of Servicing Notice must contain “a toll-free or collect-call telephone number for an employee or department of the transferor servicer that can be contacted by the borrower for answer to servicing transfer inquiries.” (Response provided Jan. 9, 2012.) Mobile moving money: How to categorize? Q. Would a loan to a consumer, secured solely by a mobile home, be HMDA-reportable when the funds are to be used for moving and setting up the mobile home? If so, would this be considered a construction loan or a purchase? Should the address reportable on the HMDA loan application register be the address where the mobile home is being moved? And would this loan be categorized as home improvement or construction? A. This loan is HMDA reportable. It should be reported as a home improvement loan and the address should be where the mobile home will be located. Construction usually refers to the actual construction of a dwelling—which this is not. The borrowers apparently already own the mobile home—so this is not a purchase, either. Thus HMDA: A Guide to Getting it Right states that a home improvement loan is (a) any dwelling-secured loan to be used, at least in part, for repairing, rehabilitating, remodeling, or improving a dwelling (or the real property on which the dwelling is located); or (b) any loan not secured by a lien on a dwelling to be used, at least in part, for one or more of those purposes that is classified as a home improvement loan by the institution. The guide also states that home improvements include improvements both to a dwelling and to the real property on which the dwelling is located. (The latter could include installation of a swimming pool, construction of a garage, landscaping, etc.) (Response provided Jan. 9, 2012.)
Leslie Callaway, CRCM, ABA Compliance Project Manager, and Mark Kruhm, CRCM, ABA Senior Compliance Analyst, and other ABA experts, answer ABA member questions here and in the online edition of Inbox at ababj.com. Member banks may submit questions to: compliance@aba. com. Disclaimer: Our answers do not provide, nor are they intended to substitute for, professional legal advice. Answers were current as of date shown at the end of each item.
44 | ABA BANKING JOURNAL | april 2012
Table of Contents for the Digital Edition of ABA Banking Journal - April 2012
ABA Banking Journal - April 2012
Young CEOs: Our turn
Pass the Aspirin
What is your appetite for risk?
Top-performing big banks
ABA Banking Journal - April 2012