Topic: Fair Lending
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Does Illinois prohibit banks from setting a minimum loan amount?
We do not see any problem with establishing a minimum loan amount under Illinois law; in fact, the Illinois Interest Act prohibits you from taking a security interest in real property for a revolving loan (for example, a HELOC) of $5,000 or less. 815 ILCS 205/4.1 (Though we note that the Illinois Financial Services Development…
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Is there any fair lending problem with offering a special rate to customers if they qualify with a certain credit score?
The program you described could have the potential for fair lending issues stemming from the credit score cutoff, which might have a disparate impact on a protected class (for example, if women tend to have lower credit scores than men, and therefore fewer women qualify for the program). Therefore, you may want to reduce the…
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Can we charge a fee for a very short term (45–60 day) bridge loan? Or could we waive some of the fees that we would charge on a normal mortgage loan?
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…
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Can our bank advertise a program of home loans exclusively for members of specific professions, such as teachers, policemen, firefighters, and healthcare workers, or could this be viewed as unlawful discrimination?
Assuming that it is not done inappropriately in other respects, your bank is not prohibited from advertising or offering a home loan program exclusively to a particular profession. The federal Equal Credit Opportunity Act and its corresponding rule, Regulation B, prohibit banks from discriminating in the extension of credit based on race, color, religion, national…
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Can a bank turn down a home equity credit application for no reason other than the applicant has a serious gambling problem? Our bank is in a small town and has all of the applicant’s financial information, but the credit is perfect, the home has value, and the income is there.
Regulation B allows a creditor to consider “any information obtained” in connection with an application for credit, as long as the information is not used to discriminate against an applicant on a prohibited basis. We are not aware of any law or court decision that prohibits a creditor from considering an applicant’s gambling history. 12…