Does your bank’s loan portfolio include pricing and/or underwriting exceptions? The answer’s probably yes, if you’re like most banks. Let’s look at Fair Lending and these exceptions. It’s not that you can’t have exceptions. The key to it is really quite simple. They have to be monitored and they have to be controlled. To do that, you have to know where these exceptions are coming from, where they’re not coming from, as well as being consistent in applying those exceptions. In other words, we can’t have one lender in the bank, whose been there for 20 years, willing to make exceptions and then have a younger lender, that maybe just started in the last year or so, and they’re a by the book lender.
It’s a matter of chance when an applicant walks into the door as to how well they’re going to be able to negotiate with either the 20-year lender or the brand new lender. Is it really fair that the 20-year lender is more willing to go off the beaten path when it comes to negotiating on something that would maybe be a pricing or an underwriting exception? As opposed to the brand new lender who is only going to do it by the book because they’re afraid that if they don’t go by the book they might get in trouble. Now that doesn’t quite seem fair.
It’s not that you can’t have exceptions. The question is are they monitored and controlled? That’s the expectation that the industry and the regulatory agencies would be looking for when they come into your organization the next time. If you’re looking for more information on the risks that are at play when it comes to fair lending, how to mitigate them, the latest regulatory guides and expectations, again, I want to invite you and your team to join us for an upcoming two-hour presentation, All About Fair Lending. Get registered today for the latest plain English translation in that area.
Jerod is the leader of Banker’s Compliance Consulting’s training productions. He is a nationally recognized speaker. Whether it’s a conference, seminar, school, webinar, or luncheon, it’s easy to stay engaged when he presents due to the amount of passion and energy he brings to each and every compliance topic. Jerod has spoken on behalf of the American Bankers’ Association, BankersOnline, many state banking associations, private compliance groups, and financial institutions. He is a Certified Regulatory Compliance Manager (CRCM) and BankersOnline Guru.
Jerod likes to spend his time (between reading regulations and producing compliance training!) relaxing at the lake with his wife and three children, following their activities or engaged in something sports related!