For example, a lender might offer its loan officers financial incentives that have the effect of inducing them to charge some applicants higher interest rates or to “steer” them to higher-priced loan products. Lenders at risk for pricing discrimination receive targeted reviews of their pricing to ensure that they are complying with fair lending laws.
Loan price disparities, however, are not just a legal and supervisory issue. They also raise important social and policy concerns. The questions I raised earlier about access to prime products, lender competition, and borrower awareness and financial literacy may well be relevant to understanding the price disparities we observe.