Yes, you may run into fair lending concerns regarding this type of discount program. Neither federal nor state anti-discrimination laws treat “occupation” as a protected class. In other words, you are not prohibited from giving preferential treatment to an individual based their occupation. However, such a policy may create a fair lending challenge if it has a disparate impact on (or disproportionately excludes) a protected class of citizens. For example, if half of your village population is female, but 5% of your local civil servants are female, the program may be viewed as disproportionately excluding women. This type of disparity is not automatically a fair lending violation. However, if a regulator finds that your policy has a disparate impact, you may be required to justify your program based on a business necessity, such as cost or profitability. Therefore, we recommend that if you establish a policy of discounting mortgage origination fees to civil servants, you carefully monitor the program for disparate impact issues.

Finally, we are not aware of any law or regulation that would prevent you from including village board in the program.  

For resources related to our guidance, please see:

• Equal Credit Opportunity Act, 15 USC 1691 (“It shall be unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction—(1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); (2) because all or part of the applicant’s income derives from any public assistance program; or (3) because the applicant has in good faith exercised any right under this chapter.”)

• Illinois Human Rights Act, 775 ILCS 5/1-103 (“‘Unlawful discrimination’ means discrimination against a person because of his or her race, color, religion, national origin, ancestry, age, sex, marital status, order of protection status, disability, military status, sexual orientation, pregnancy, or unfavorable discharge from military service…”)

• FFIEC Interagency Fair Lending Procedures, page iv (“When a lender applies a racially or otherwise neutral policy or practice equally to all credit applicants, but the policy or practice disproportionately excludes or burdens certain persons on a prohibited basis, the policy or practice is described as having a ‘disparate impact.’ . . . The fact that a policy or practice creates a disparity on a prohibited basis is not alone proof of a violation. When an Agency finds that a lender’s policy or practice has a disparate impact, the next step is to seek to determine whether the policy or practice is justified by ‘business necessity.’ The justification must be manifest and may not be hypothetical or speculative. Factors that may be relevant to the justification could include cost and profitability. Even if a policy or practice that has a disparate impact on a prohibited basis can be justified by business necessity, it still may be found to be in violation if an alternative policy or practice could serve the same purpose with less discriminatory effect.”)