Kiowope Capital Limited
Fair Lending/Non-Discrimination Policy and Procedures

POLICY STATEMENT

The board of directors, executive management, and staff of Kiowope Capital Limited (hereafter referred to as (“Kiowope Capital”) are committed to the practices of fair lending. It is the policy of Kiowope Capital to make credit products available to all applicants who meet our business lending requirements in a fair and consistent manner within the confines of safe and sound lending practices.

Kiowope Capital does not discriminate against any credit applicant on the basis of race, color, religion, national origin, marital status, age (providing the applicant is of legal age and has the capacity to enter into a binding legal contract), sex, disability, familial status, receipt of public assistance, or if the individual has exercised in good faith any right under the Consumer Credit Protection Act, or on any other prohibited basis.

Kiowope Capital complies with all fair lending laws and regulations, including the Equal Credit Opportunity Act (ECOA), the Home Mortgage Disclosure Act (HMDA), the Fair Credit Reporting Act (FCRA), the Fair Housing Act (FHAct), and the Community Reinvestment Act (CRA). The courts have recognized three methods of proof of lending discrimination under the ECOA and the FHAct:

  • Overt evidence of disparate treatment

  • Comparative evidence of disparate treatment

• Evidence of disparate impact Disparate Treatment

The existence of illegal disparate treatment may be established either by statements revealing that a lender explicitly considered prohibited factors (overt evidence) or by differences in treatment that are not fully explained by legitimate nondiscriminatory factors (comparative evidence).

Overt Evidence of Disparate Treatment.There is overt evidence of discrimination when a lender openly discriminates on a prohibited basis. There is overt evidence of discrimination even when a lender expresses –

but does not – act on a discriminatory preference:

Disparate treatment may more likely occur in the treatment of applicants who are neither clearly well qualified nor clearly unqualified. Discrimination may more readily affect applicants in this middle group for two reasons. First, if the applications are “close cases,” there is more room and need for lender discretion. Second, whether or not an applicant qualifies may depend on the level of assistance the lender provides the applicant in completing an application.

Redlining is a form of illegal disparate treatment in which a lender provides unequal access to credit, or unequal terms of credit, because of the race, color, national origin, or other prohibited characteristic(s) of the residents of the area in which the credit seeker resides or will reside or in which the residential property to be mortgaged is located. Redlining may violate both the FHAct and the ECOA.

Disparate Impact

When a lender applies a racially or otherwise neutral policy or practice equally to all credit applicants, but the policy or practice disproportionately excludes or burdens certain persons on a prohibited basis, the policy or practice is described as having a “disparate impact.” The fact that a policy or practice creates a disparity on a prohibited basis is not alone proof of a violation. When an agency finds that a lender’s policy or practice has a disparate impact, the next step is to seek to determine whether the policy or practice is justified by “business necessity.” The justification must be manifest and may not be hypothetical or speculative. Factors that may be relevant to the justification could include cost and profitability.

COMMUNITY REINVESTMENT ACT COMMITMENT

Kiowope Capital is strongly committed to the spirit of the Community Reinvestment Act. Kiowope Capital believes that it should play a significant role in meeting the credit needs of our community, including providing affordable housing to low-and moderate -income neighborhoods in our assessment area.

SECOND REVIEW

Kiowope Capital executive management and other key personnel review applications denied within 30 days and for any reason and exceptions to lending standards and guidelines requested by lenders. It is not the role of the second review team to make loans that were denied. Lending authority rests with the individual loan officer and lending department managers.

FAIR LENDING AND CRA COMPLAINTS

Kiowope Capital takes any complaint about its fair lending practices seriously. If any team member receives a fair lending complaint, the policy is to take the following steps:

  • Kiowope Capital will act on oral, electronic, or written complaints immediately. All complaints will be referred to the Chief Compliance Officer for review and resolution.

  • The Compliance Officer, and Executive Officer, or outside counsel will forward a letter to the customer and, if appropriate, to the respective primary regulator for their reference, acknowledging the complaint and noting that a formal response will be forthcoming.

  • The Compliance Officer will review and address the complaint, as required.

  • The Compliance Officer will maintain complete documentation concerning the complaint and the results of

  • Kiowope Capital’s investigation.

  • When the investigation is complete, the Compliance Officer will send a letter to the customer and, if appropriate, to the respective primary regulator, revealing the results of the investigation.

    If the situation indicates a significant error on the part of Kiowope Capital monetary shortage to the customer, or any other error affecting the customer, an Executive Officer will contact the customer, explain the situation, offer apologies, and request a meeting to discuss any corrective actions and/or compensations for harm caused.

    Kiowope Capital will handle each complaint fairly and consistently and within the time frames prescribed by law, or within 30 days of the date we

received the complaint from the customer or the primary regulator, whichever is earlier.

The Compliance Officer will place complaints received concerning fair lending or the Kiowope Capital’s efforts to meet the credit needs of its community in Kiowope Capital’s CRA electronic file after redacting the complaints to protect the privacy of individuals. The Compliance Officer will also place its response to the complaint/inquiry in the CRA electronic file.

The Compliance Officer or designee will maintain a log concerning fair lending and CRA complaints and will report to executive management concerning the complaints and detailing the subject matter, results of the investigation, and resolution of each complaint.

If an investigation or self – testing program discovers practices that may be discriminatory, Kiowope Capital will determine the cause and take appropriate corrective action to resolve. Examples of action taken are, but not limited to:

  • Identifying customers whose applications may have been inappropriately processed, offering to extend credit if they were improperly denied, compensating customers for any damages, both out – pocket and compensatory, and notifying them of their legal rights.

  • Correcting any institutional policies or procedures that may have contributed to the discrimination

  • Identifying, and then training and/or disciplining, the employees involved

  • Considering need for changes in marketing strategy or loan products to better serve minority segments of the lender’s market

  • Improving audit and oversight systems to ensure that there is no recurrence of the discrimination

    COMPENSATION PRACTICES, LOAN PRICING, AND ANTI-STEERING RULES

    All Kiowope Capital personnel are required to follow the compensation and anti-steering rules set forth for mortgage loan originators in accordance with Regulation Z.

    Kiowope Capital executive management directs procedures to ensure a compensation policy is in place for employees who are originators in compliance with Regulation Z.

    Loan Officers of Kiowope Capital may not steer consumers to products that will pay them a higher commission. All Kiowope Capital personnel are required to follow the rules in Regulation Z at 12 CFR 1026.36(e) regarding the anti-steering rules.

    Loan Officers of Kiowope Capital may enjoy a safe harbor if they offer consumers a product with the following features for each type of transaction in which the consumer expresses an interest:

  • The lowest interest rate for which the consumer qualifies;

  • The lowest points and origination fees; AND

  • The lowest rate for which the consumer qualifies for a loan with no risky features, such as a prepayment

  • Penalty, negative amortization, or a balloon payment in the first seven years.

    PRACTICES TO AVOID

    As a condition of employment with Kiowope Capital, all personnel are required to avoid any practice or policy that will obscure significant risk to the consumer. In order words, we must always prioritize and practice transparency when presenting products to our customers. For example, if we advertise or promote a nontraditional mortgage by emphasizing the comparatively lower initial payments permitted for these loans, we should also provide clear and comparably prominent information alerting the consumer to the risks.

    PROMOTIONAL MATERIALS AND PRODUCT DESCRIPTIONS

    Promotional materials and other product descriptions should provide information about the costs, terms, features, and risks of mortgage loan products that can assist consumers in their product selection decisions, including information about:

  • Payment shock

  • Prepayment penalties

  • Cost of reduced documentation loans VENDORS AND OTHER THIRD-PARTY PROVIDERS

It is the policy of Kiowope Capital to require any vendors or third-party partners to adhere to the bank’s fair lending policy. To ensure that the bank’s partners are aware of the bank’s policies, Kiowope Capital, when necessary, will request an affirmative statement from each vendor and or partner that the vendor and or partner has nondiscriminatory policies and procedures in place.

In some cases, depending on the extent of the relationship, Kiowope Capital will review the partner’s policies and procedures related to pricing, application procedures, marketing, and compensation. Kiowope Capital will also request a review of the vendor and or partner’s nondiscrimination policy statement in writing before entering into a business relationship.

COMPLIANCE OFFICER REVIEW

The compliance officer is responsible for reviewing, when appropriate, the policies and procedures of vendors and third parties as they relate to fair lending.

TRAINING

It is the policy of Kiowope Capital to train all employees and executive management on the Community Reinvestment Act and fair lending at least once a year. The following employees will receive in-depth training:

  • Mortgage loan originator, underwriters, and support staff

  • Senior management

    The bank may also include third parties in its annual fair lending training or conduct special training, depending on the relationship. The compliance officer will conduct such training and keep appropriate records.