Topic: Fair Lending
-
Does Illinois prohibit banks from setting a minimum loan amount?
—
by
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…
-
Is there any fair lending problem with offering a special rate to customers if they qualify with a certain credit score?
—
by
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…
-
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?
—
by
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…
-
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?
—
by
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…
-
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.
—
by
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…