Question & Answer

Question: We are planning to offer special terms for multiple account-holders. One idea is to offer a rate reduction for mortgage loans to customers that have a certain mix of deposit accounts in the bank and meet a minimum total balance requirement. My concern is that there would be two such programs - one for people under 50 and one for people over 50. Does this mean that the bank would be offering different credit terms based on age in a way that would violate ECOA?

Answer: : Very possibly, yes. It would really depend on what program requirements are packaged together. If the deposit package requirements are basically comparable, and the loan rate offered is the same, there might not be a problem. But you would have to look at this from the point of the customers to reach a conclusion.

For example, if you offer the package to customers under 50 who have a checking account and an MMDA with a total balance in excess of $10,000, while the package for those over 50 is a checking account and a certificate of deposit, you might find a 60 year old customer complaining that putting that much money in a CD is not a desirable thing to do with ready cash and that therefore, the offer is more restrictive to the over-50 customers. In this case, I do think you have a problem.

However, if the package is different primarily in offering better terms in the deposit-related package for those over 50 and the loan terms are the same, then the offer might withstand ECOA scrutiny.

Copyright © 1998 Compliance Action. Originally appeared in Compliance Action, Vol. 3, No. 16, 12/98