We do not believe that any laws or regulations would prevent you from charging the same fees and penalties on a bridge loan as you could charge on a longer-term loan. In our view, the general rule in the Illinois Banking Act, that banks may charge any fees “subject only to the provisions of [Subsection 4(1)] of the Interest Act,” provided they are based on a bank’s “prudent business judgment and safe and sound operating standards,” would apply. 205 ILCS 5/5e. Moreover, Subsection 4(1) of the Interest Act states that a bank is authorized “to receive or contract to receive and collect interest and charges at any rate or rates agreed upon by the bank or branch and the borrower.” 815 ILCS 205/4(1). And the Illinois Supreme Court has specifically held that Section 4(1)(l) of the Interest Act, which allows banks to charge any fee on a loan “secured by a mortgage on real estate,” is not affected by certain other statutory provisions that restrict interest rates and charges. 815 ILCS 205/4(1)(l)United States Bank Nat’l Ass’n v. Clark, 216 Ill.2d 334, 349 (2005); see also IDFPR Interpretive Letter 98-01.

If you decide to waive any fees and penalties on the bridge loan, and you do not commonly do this, we agree that this could raise a red flag for examiners looking for fair lending violations. And if you commonly waive fees on bridge loans, we would recommend making this a written policy. An unwritten policy or practice allowing loan originators to waive fees in their discretion could be considered an indicator of disparate treatment. Any “substantial disparities among prices being quoted or charged to applicants” could form the basis of a fair lending finding. FDIC Compliance Manual, Part IV, Fair Lending Laws and Regulations, pages 1.7, 1.13 (June 2006). We also recommend that you document your legitimate business reasons for waiving any fees on bridge loans. See Comment 2, Official Staff Commentary, 12 CFR 1002.6(a) (“The Act and regulation may prohibit a creditor practice that is discriminatory in effect because it has a disproportionately negative impact on a prohibited basis, even though the creditor has no intent to discriminate and the practice appears neutral on its face, unless the creditor practice meets a legitimate business need that cannot reasonably be achieved as well by means that are less disparate in their impact”).