Targeting Customers For HELOC & Reg B Violations

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Question:

I would like to send a letter to customers age 4065, homeowners, with $30K or more available home equity, children age 1719 in the home. The letter would suggest applying for a home equity LOC to use for possible college tuition expenses. I've been told this violates REG. B because I'm discriminating on the basis of age. Is this true? Our bank advertises the same product in newspapers, newsletters, lobby displays, etc. This is just one part of a larger marketing plan.

Answer:

There's absolutely nothing wrong with targeting your mail campaign to a select group. I see nothing problematic in the group you've selected.

Your only Regulation B concern is that you not turn away persons who don't fit into the group. So if someone who's 66, with $25K equity wants to get a HELOC to finance his return to school, you won't turn him down if he's otherwise creditworthy.

Your coverage of the rest of your market with other marketing materials suggests you're not going to have a problem.

First published on BankersOnline.com 8/05/02