Case Study: Meeting HUD's Requirements
The MLO works for a lender who does a lot of FHA loans and the company has been notified by HUD that the company’s delinquency rate has risen to a point where the HUD Neighborhood Watch ratio puts the company at risk of not being able to originate FHA loans. The MLO has a dilemma. It looks like the initiative she created for the company two (2) years ago to reach out to a particular minority population on the city’s west side is playing a big part in the delinquency ratio and she feels that i is her responsibility to remedy the situation.
The answer seems fairly simple. Modify the initiative to
require that those who reside on the west side of the city (a specific minority
group) be required to make larger down payments on loans. She thinks if the loan criteria
is modified to limit the maximum LTV’s on west side loans to eighty percent
(80%). Within ninety (90) days they will see an improvement in loan performance.
Is this an acceptable practice in light of the
responsibility to insure the whole company does not lose its FHA capabilities?
No, the solution here targets a racial group with less than equal or favorable loan terms. You'd have to implement these terms unilaterally without regard to racial profiling or geography.
ReplyDeleteThis would be considered discrimination against a particular race - not acceptable.
ReplyDeleteThis is discriminatory behavior and would not be acceptable.
ReplyDeleteAbsolutely not. The remedy targets a specific minority group and geographic location.
ReplyDeleteI believe this would not be a good plan as it is targeting a specific geographic area which is a form of reverse redlining correct? Also, it impede on the FHA criteria in taking race into consideration.
ReplyDeleteNo, this would be a targeting a minority group and geographic area also know as redlining.
ReplyDelete1 of 1
ReplyDeleteThis is a clear sign of discrimination and targeting a specific geographic area and is unacceptable
no
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