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My bank only offers a home equity loan and an adjustable rate mortgage (ARM) as in-house loan options. There are no points or discounts, and there is only one interest rate for each. Does have to provide the anti-steering disclosure for these loans?

To comply with the anti-steering prohibitions found in Regulation Z §1026.36(e) (Truth in Lending Act) the loan originator must provide options for the type of transaction the consumer is requesting. My bank does loans with the secondary market. For those loans, it always has an anti-steering disclosure, but my question is regarding in-house loans. The bank only offers a home equity loan and an adjustable rate mortgage (ARM.) There are no points or discounts, and there is only one interest rate for each. Since they are different products and one product for each, the bank does not have to provide the anti-steering disclosure for these loans, correct?

Perhaps. See §1026.36(e)(2) which states:

Permissible transactions. A transaction does not violate paragraph (e)(1) of this section if the consumer is presented with loan options that meet the conditions in paragraph (e)(3) of this section for each type of transaction in which the consumer expressed an interest. For purposes of paragraph (e) of this section, the term “type of transaction” refers to whether:

  1. A loan has an annual percentage rate that cannot increase after consummation;
  2. A loan has an annual percentage rate that may increase after consummation; or
  3. A loan is a reverse mortgage.

Assuming your institution’s home equity loan has an APR that cannot increase after consummation while the adjustable rate mortgage can, each will be deemed a separate “type of transaction” and as such there would generally be no “steering” involved if the consumer requested one type versus another. However, if, for example, the consumer requested a fixed-rate loan and the creditor had the option of such a product offered “in house” as well as through the “secondary market” then it is possible that steering could take place. This assumes, of course, that compensation differs for those offered “in house” vs. the “secondary market.” (October 2016)

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