The article further discusses the fair lending concerns that emerge when lenders and originators give savvier or more educated borrowers more access to discounts while protected classes are at a disadvantage. It also mentions the prohibited practice of loan officers extending their pricing exceptions beyond the typical 50 to 100 basis points without explicit approval from their managers. The article concludes by stating that industry experts expect increased enforcement related to pricing exceptions, especially in such a competitive purchase loan market.
Key takeaways:
- Mortgage lenders are offering discounts on loan pricing to attract borrowers, but the criteria for who receives these discounts is attracting regulatory scrutiny.
- Loan officers often have discretion to offer pricing exceptions, but this can lead to disparities and potential discrimination against less savvy or first-time borrowers.
- Regulators at the Consumer Financial Protection Bureau (CFPB) have expressed concerns about fair lending issues associated with pricing exceptions and are looking to have lenders alter their practices to avoid disparities in the future.
- Some loan officers are reportedly misclassifying the source of leads to cut their own compensation and pass the savings onto the borrower, a practice that is illegal and raises questions about fair lending.