We are not aware of any statutory or regulatory limitations on paying incentives to borrowers who provide certain loan documents by timelines set by the bank, assuming that this program is applied equally to all customers for a particular loan product. We do recommend providing the terms of this program in writing and reviewing those terms carefully to ensure that they are not confusing, unfair or unreasonable.

However, whether your bank should offer such incentives (or others such as offering gift cards or reducing the loan principal) also might depend on secondary market requirements; for example, it appears that Fannie Mae limits permissible principal reductions (which it refers to as principal curtailments) to just a few narrow situations.

For resources related to our guidance, please see:

• Fannie Mae Selling Guide, B2-1.4-05, Principal Curtailments (June 30, 2015) (“Fannie Mae also allows additional principal payments remitted by a borrower to prepay the mortgage loan as permitted by the loan documents. All borrower-remitted curtailments received by the lender prior to delivery of the loan to Fannie Mae (or MBS issuance) must be applied prior to delivery and may not be held until after loan delivery or MBS issuance. Curtailments received after loan delivery must be applied in accordance with the Servicing Guide.”)