I get this question all the time: Borrower goes from loan officer A and gets one price (consistent with all prices offered by loan officer A) and then goes to loan officer B (in the same branch) and gets a different price (consistent with all prices offered by loan officer B). Is that a per se fair lending violation? No.
Fair lending seeks to answer the question of whether a person was treated differently based upon a protected characteristic. However, if all persons of all backgrounds get the same price for loan officer A and all persons get the same price from loan officer B, obviously the distinction between A and B was not based on the protected characteristic of the borrower.
Beyond this, absent direct evidence of discriminatory intent, fair lending cases are premised on the notion that a statistically significant deviation exists between the loans offered to a protected group and a non-protected group demonstrating a pattern or practice have a disparate impact on the protected group. Of course, no statistical deviation can be discerned unless there is a sufficient sample of similarly situated borrowers to draw a conclusion that a deviation in fact exists. As an analogy, if you flipped a coin twice and it landed on heads both times, no conclusion could be drawn as to whether it was a trick coin/or corrupted process. Flip the coin 100 times and it ends up heads 100 times, a conclusion as to the fairness of the coin flipping process can fairly be inferred. The point is that in order to conclude that the process has been subjected to an improper force a sufficient sample of borrowers—far in excess of one circumstance)—must be examined.
This is not to say, of course, that such a circumstance could not result in a fair lending violation. Obviously, if most minorities did loans through a loan officer at a higher price and most non-minorities went through a loan officer at a lower price, it certainly could lead to an overall statistical deviation giving rise to fair lending liability. Yet, in a situation where the dispersion of protected borrowers is unknown it simply cannot be determined—without empirical evidence—the implications of varied pricing on a company’s fair lending. The bottom line is that the mere fact varied pricing exists does not in and of itself dictate that fair lending laws are being violated.
