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#225956 - 08/11/04 11:14 AM Notice of Credit Score - Dec 1st?
Anonymous
Unregistered

Is everyone programming their systems to produce a "Notice to the Home Loan Applicant" starting Dec 1st or are you waiting for the regulation to be published? Will the reg delay the effective date?

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#225957 - 08/11/04 01:54 PM Re: Notice of Credit Score - Dec 1st?
ToTo Offline
Platinum Poster
Joined: Apr 2004
Posts: 595
OZ
There is no requirement under the FACT act that any regulations be issued on this section. This may be all we're going to get. As of now, this is scheduled to be effective Dec 1.

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#225958 - 08/11/04 08:29 PM Re: Notice of Credit Score - Dec 1st?
Anonymous
Unregistered

Do you know how they define the scope of the term "home loan applicant" ?
I am nervous after HMDA....

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#225959 - 08/12/04 01:24 PM Re: Notice of Credit Score - Dec 1st?
ToTo Offline
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Joined: Apr 2004
Posts: 595
OZ
It's not "defined", but describes the circumstances when the notice is applicable as: when a credit score is used "in connection with an application initiated or sought by a consumer for a closed end loan or the establishment of an open end loan for a consumer purpose that is secured by 1 to 4 units of residential real property".

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#225960 - 08/12/04 04:00 PM Re: Notice of Credit Score - Dec 1st?
Bear Collector, CRCM Offline
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Bear Collector, CRCM
Joined: Nov 2000
Posts: 1,830
District of Columbia
So this applies to HELs and HELOCS? I was afraid of that!
BC
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#225961 - 08/12/04 04:17 PM Re: Notice of Credit Score - Dec 1st?
TomS Offline
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Joined: Jan 2004
Posts: 317
USA
Is it your understanding that we will have to disclose the actual credit score to the consumer? And does this apply to all applicants, or only those who get a loan?
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#225962 - 08/12/04 04:47 PM Re: Notice of Credit Score - Dec 1st?
Anonymous
Unregistered

I didn't know we were supposed to disclose any credit scores to home loan applicants. Where is this rule? I did the notice on reporting delinquencies to credit bureaus, and to Chex Systems but where does it say anything about applications and credit scores???

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#225963 - 08/12/04 04:52 PM Re: Notice of Credit Score - Dec 1st?
ToTo Offline
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Joined: Apr 2004
Posts: 595
OZ
I have no insight on what is meant here and I'm just reading this like everyone else, but it appears to me that it applies to applicants, not just to those who obtain a loan. Yes, an actual credit score must be disclosed, along with the key factors that adversely affected the score, but there are options in the act regarding which credit scores may be disclosed in order to comply with this section.

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#225964 - 08/12/04 05:27 PM Re: Notice of Credit Score - Dec 1st?
Dave M_TCA Offline
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Dave M_TCA
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Posts: 685
Wherever my most benevolent em...
You can find the requirement here, go to section 212.
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All opinions expressed are mine and not those of my employer and are not to be taken as legal advice.

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#225965 - 08/12/04 06:44 PM Re: Notice of Credit Score - Dec 1st?
upstateNY Offline
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Joined: Apr 2003
Posts: 933
New York State
I am replying with a question. What is everyone's opinion as to the definition of residential real property in Section 212? Do you feel that real estate must be involved? Or, would a loan secured by a mobile home only (no land), be covered?

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#225966 - 08/12/04 07:24 PM Re: Notice of Credit Score - Dec 1st?
Dave M_TCA Offline
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Dave M_TCA
Joined: Oct 2000
Posts: 685
Wherever my most benevolent em...
Maybe someone else can find one, but the only definition of "residential real property" that I can find is in OTS regs at 12 CFR §541.23 and says:
The terms residential real estate or residential real property mean:

(a) Homes (including a dwelling unit in a multi-family residential property such as a condominium or a cooperative);
(b) Combinations of homes and business property (i.e., a home used in part for business);
(c) Other real estate used for primarily residential purposes other than a home (but which may include homes);
(d) Combinations of such real estate and business property involving only minor business use (i.e., where no more than 20 percent of the total
appraised value of the real estate is attributable to the business use);
(e) Farm residences and combinations of farm residences and commercial farm real estate;
(f) Property to be improved by the construction of such structures; or
(g) Leasehold interests in the above real estate.
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David J Mulkerin, CRCM
All opinions expressed are mine and not those of my employer and are not to be taken as legal advice.

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#225967 - 09/07/04 06:50 PM Re: Notice of Credit Score - Dec 1st?
Skittles Offline
10K Club
Skittles
Joined: Sep 2002
Posts: 13,965
TN
I tried using Jacob's Dad's link, but it no longer functions. Can someone point me in the right direction, please.
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#225968 - 09/07/04 09:02 PM Re: Notice of Credit Score - Dec 1st?
SouthernComfort Offline
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Joined: Aug 2001
Posts: 705
Southern Illinois, USA
When you say "credit score" are you talking about the empirica score or a credit scoring system? I was under the impression that notice had to be sent only if you used a credit scoring system. Apparently I am wrong. How will you handle this?

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#225969 - 09/07/04 09:26 PM Re: Notice of Credit Score - Dec 1st?
Jack Holzknecht Offline

Gold Star
Joined: Aug 2001
Posts: 330
Louisville, KY
The term residential real property is used in several regulations, including RESPA, for example. The "residential" part of the term refers to a dwelling, usually a one- to-four family dwelling. "Real property" refers to real estate or "dirt" as I prefer to clarify the term. Combined the term residential real property usually means a one- to four-family dwelling and the dirt upon which it is situated.

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#225970 - 09/08/04 02:14 PM Re: Notice of Credit Score - Dec 1st?
SouthernComfort Offline
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Joined: Aug 2001
Posts: 705
Southern Illinois, USA
I wanted to bump this back up since no one answered my question. Does credit score mean a credit score on a credit report that you use in the determination of a loan or a credit scoring system? Would someone please reply.
Thanks

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#225971 - 09/08/04 02:17 PM Re: Notice of Credit Score - Dec 1st?
Skittles Offline
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Skittles
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Posts: 13,965
TN
It's from the credit bureau report. I'm kind of hoping (but not relying on) that the credit bureau agencies will incorporate this into their reports.
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#225972 - 09/09/04 03:56 PM Re: Notice of Credit Score - Dec 1st?
smith Offline
Member
Joined: Jun 2004
Posts: 69
Nebraska
Quote:

Renniks, the way I read 212 (which of course could be incorrect), the disclosure of the credit score needs to have the elements listed in 609(f), which are: the current score, the range of scores, the key factors, the date on which the credit score was created, who provided the score. Anyone else with an opinion this?





Thank you, Andy, for suggesting we consolidate these threads. I do have a question on one of the other 212 threads. IMHO, I do not think the disclosure required by mortgage lenders needs to list the range of scores or the factors. I believe that the CRAs need to provide that information when they provide scores to consumers, but the mortgage lenders need only to provide the credit score and the contact information for the bureaus. Does anyone else read it that way?

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#225973 - 09/09/04 04:08 PM Re: Notice of Credit Score - Dec 1st?
Anonymous
Unregistered

"(B) KEY FACTORS.—The term ‘key factors’ means all
relevant elements or reasons adversely affecting the credit
score for the particular individual, listed in the order of
their importance based on their effect on the credit score."
Does this mean lenders will need to disclose key factors or only the consumer reporting agencies? How will the key factors appear on the consumer report for lender to disclose? It says there is an order of importance and total number shall not exceed four.

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#225974 - 09/09/04 04:27 PM Re: Notice of Credit Score - Dec 1st?
Skittles Offline
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Skittles
Joined: Sep 2002
Posts: 13,965
TN
I asked our head of loan processing to check with LaserPro concerning this disclosure. It looks like they will be providing it in an update prior to 12/1/04. I'm not sure what it will look like - but probably be a fill-in form. Now our mortgage department needs to verify with Genesis that they will also provide it.
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#225975 - 09/09/04 05:31 PM Re: Notice of Credit Score - Dec 1st?
upstateNY Offline
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Joined: Apr 2003
Posts: 933
New York State
We are meeting with our credit bureau reps to determine the format in which we will receive this information from the bureaus. It is my belief that we will provide to the customer that which is given to us by the bureau, plus the required notice.

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#225976 - 09/10/04 02:01 PM Re: Notice of Credit Score - Dec 1st?
IUalum Offline
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IUalum
Joined: Mar 2002
Posts: 942
Kentucky
We currently do not use credit scores in our loan decisions. Will this require that we begin obtaining them just so we can disclose the info to the consumer??
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#225977 - 09/10/04 04:04 PM Re: Notice of Credit Score - Dec 1st?
upstateNY Offline
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Joined: Apr 2003
Posts: 933
New York State
No, if you do not currently receive the credit score along with the other information in the credit report, you will not have to change your practice.

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#225978 - 09/10/04 05:13 PM Re: Notice of Credit Score - Dec 1st?
Sinatra Fan Offline
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Posts: 5,568
New Jersey
Quote:

No, if you do not currently receive [emphasis mine] the credit score along with the other information in the credit report, you will not have to change your practice.




We do not use credit scores in our underwriting, but we do receive them in credit reports (our credit agency provides them automatically). Must we disclose the scores to applicants? I say "no," but I fear the rebuttable presumption would be that if we receive it, we use it.

In which case, I suppose we will ask the credit agency to simply not provide credit scores to us.
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#225979 - 09/10/04 06:21 PM Re: Notice of Credit Score - Dec 1st?
Anonymous
Unregistered

Our regulators told us that we did have to disclose the credit score on denials because we have the credit score and there is always the chance that a lender used the score as another tool to support their credit decision. Even if you just casually look at it and confirm your decision, you've used it and it must be disclosed in compliance with the rules.

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#225980 - 09/10/04 07:25 PM Re: Notice of Credit Score - Dec 1st?
TOLIE Offline
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TOLIE
Joined: Nov 2003
Posts: 41
Michigan
Beginning this week, our merged credit reports have been sent to us with a score disclosure attached, one for each applicant with the home loan disclosure, score model developer, range of scores and each of the three credit scores. It also has consumer referral information for each of the three credit repositories.

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