Skip to content
BOL Conferences
Page 2 of 3 1 2 3
Thread Options
#373836 - 06/27/05 06:31 PM Re: Credit score disclosure - but we didn't use it
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Quote:

We obtain a credit score, but state in our policy that we do not use it to make the loan decision.




How can you insure that your loan officers/underwriters are not letting the score affect their decision if it is present?

Our policy use to state that we did not accept telephone applications. Guess what I found in one of my first compliance reviews after starting here? Yep, we now have a procedure for telephone applicaitons thanks to this ONE loan officer.

OK, enough said from me, because as most of you know I'm pretty head-strong in my opinion on this specific issue.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#373837 - 06/27/05 06:39 PM Re: Credit score disclosure - but we didn't use it
Anonymous
Unregistered

Thank you all for the additional feed back. I agree with you Ted and Andy in regards to disclosing all scores.
Im just trying to get this across to my operations department that doesnt see it that way. They are stuck on the "use" word.
I still read ยง609(g)Disclosure of Credit Scores by Certain Mortgage Lenders -- as saying Who has to disclose. Do you make or arrange loans? Do you use credit scores in connection …? If so then you have to do this….

(A) Information Required under Subsection (f)
(i) In general. A copy of the information identified in subsection (f) that was obtained from a consumer reporting agency or was developed and used by the user of the information.
You need to supply the customer with a copy of the credit score(s) obtained from the CRA.

Now (f) states in more detail...
(1) In general. Upon the request of a consumer for a credit score, a consumer reporting agency shall supply to the consumer a statement indicating that the
information and credit scoring model may be different than the credit score thatmay be used by the lender, and a notice which shall include--
(A) the current credit score of the consumer or the most recent credit score of the consumer that was previously calculated by the credit reporting agency for a purpose related to the extension of credit;

Like Ted stated, you have to have a high and low score to know what the middle score is.
I believe everyone is stuck on "used" to mean priced. If you used the score to approve/ deny/or price the loan.

That doesnt make sense for the following reason:
You have a real estate application. John Doe and Jane Doe apply.
John scores 600, Jane scores 450. Your loan policy states you price/approve the loan based on the higher of the two scores (or lower). Now you didnt "use" the other score so that means you dont have to disclose to that applicant? The other score was in file, but we didnt "use" it.

--i know we should disclose on each score. I was just giving an example of how not disclosing multiple scores sounds to me.

This is all my opinion, and a lot of my management doesn agree with me (lol)

I think im finding my self venting....thanks again for the feedback!!! It is greatly appreciated!!!

Return to Top
#373838 - 06/29/05 12:42 PM Re: Credit score disclosure - but we didn't use it
Anonymous
Unregistered

Does the thought on the John Doe, Jane Doe application make sense to anyone else?

Return to Top
#373839 - 06/29/05 06:26 PM Re: Credit score disclosure - but we didn't use it
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,395
I understand the John Doe/Jane Doe example #383773 posted but I don't agree with it.

In order to price based on the higher of the two scores, you "use" the lower score to determine which one is higher. You've got the scores. You've used them. You should disclose for both of them.

And to quote Dan, "...enough said from me, because as most of you know I'm pretty head-strong in my opinion on this specific issue."

Return to Top
#373840 - 06/29/05 07:03 PM Re: Credit score disclosure - but we didn't use it
Anonymous
Unregistered

same poster -- I agree, i just meant -- i dont believe the emphasis being put on the word "use" is revelent. If you obtain it, disclose it. the example above just paints the picture a little more clear for me.

Return to Top
#373841 - 06/29/05 08:55 PM Re: Credit score disclosure - but we didn't use it
WheezeKid Offline
100 Club
Joined: Jun 2004
Posts: 137
New Jersey
Then shouldn't the section be revised to state that the credit score should be disclosed when "obtained" rather than "used"?

Return to Top
#373842 - 06/29/05 09:34 PM Re: Credit score disclosure - but we didn't use it
Anonymous
Unregistered

Quote:

Then shouldn't the section be revised to state that the credit score should be disclosed when "obtained" rather than "used"?




The problem is, Congress was the source of the word "use" and they didn't give any clues on what they meant. If the regulators ever issue a regulation on this section, they might define what is and is not included in the term "use".

Return to Top
#373843 - 06/30/05 12:42 PM Re: Credit score disclosure - but we didn't use it
Anonymous
Unregistered

The word obtain is "used" (dont over analyze "used" here )

(g) Disclosures of credit scores by certain mortgage lenders

go to (A) (i)...in general a copy of the information identified in subsection (f) that was obtained from a consumer reporting agency or was developed and used by the user of the information.

now the information in (f)
A) the current credit score of the consumer or the most recent credit score of the consumer that was previously calculated by the credit reporting agency for a purpose related to the extension of credit;
This section doesnt say if the score was used.

In the paragraph above that in the reg

(1) In general. Any person who makes or arranges loans and who uses a consumer credit score, as defined in subsection (f), in connection with an application initiated or sought by a consumer for a closed end loan...

It really doesnt say "if" you use that score. Ive been reading it as a general statement of defining mortgage lenders. It says anyone who makes loans and uses a credit score in connection with an application...
Do you make loans?
Do you use credit scores in connection with applications....?


a copy of the information identified in subsection (f) that was obtained from a consumer reporting agency

Then you must disclose the information obtained.
The reg also only reads, used in connection....its doesnt say used in approving, denying, pricing, etc.

Return to Top
#373844 - 06/30/05 01:55 PM Re: Credit score disclosure - but we didn't use it
Anonymous
Unregistered

Well, I'm glad my questions brought about some lively discussion. I think it raises a point that the language needs clarification. I did write a note to my examiner about this and asked for written explanation (guidance) especially in our case with the DU reference to scores but no ref. to scores in our Loan Policy. Will wait and see.

Return to Top
#373845 - 06/30/05 03:23 PM Re: Credit score disclosure - but we didn't use it
Andy_Z Offline
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,748
On the Net
Let us know if you get an answer, what they say. Otherwise, I am in the camp that says "use" means "use" and it doesn't mean if you use it a lot or a little. When someone says we didn't use the high or low, that is like saying the average score was X but we didn't use any other numbers to arrive at that average. How is that possible?
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Return to Top
#373846 - 07/01/05 07:25 PM Re: Credit score disclosure - but we didn't use it
Trees Offline
Power Poster
Joined: Apr 2005
Posts: 4,013
I have received an E-mail to the effect.." although you are privy to the credit score, if it is not considered in the decision making, you do not have to provide the disclosure...include language in your credit policy documenting that you do not use the credit score...

Return to Top
#373847 - 07/01/05 08:09 PM Re: Credit score disclosure - but we didn't use it
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
I just spoke with our lead examiner, as most of you know I'm going through a compliance audit, and the FDIC's (Chicago Region) position is you must be able to prove beyond a shadow of a doubt that the score is not used if it is present. A policy statement will not suffice.

If there is any reference to the score in a write up, is high lighted or checked, then they will take the position it played a part in the decision.

So, my advice is if you have any doubt contact your regional regulatory authority. If you are regulated by the FRS, then I would request my own copy of the above opinion.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#373848 - 07/02/05 08:06 PM Re: Credit score disclosure - but we didn't use it
Andy_Z Offline
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,748
On the Net
That is similar to one of the comments at the NRCC. It almost came down to the point that if you have it, it is easier to disclose it than to justify that you didn't use it.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Return to Top
#373849 - 07/05/05 02:39 PM Re: Credit score disclosure - but we didn't use it
Anonymous
Unregistered

does anyone sell to Freddie? Correct me if I am wrong, all scores go through thier system, and from what I understand, Freddie will not fully disclose thier approval system -- so they wont directly say if they look and the high and low score. Which tells me, you cant prove they dont use the score -- so you cant prove you dont use the score.

Return to Top
#373850 - 07/05/05 04:39 PM Re: Credit score disclosure - but we didn't use it
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,395
Since we use the same regulator, can you pm me the name and title of the person issuing that email decision? I'm curious because a year ago we contacted FRS about another issue and got an email that we followed. When the examiners showed up, they DISAGREED with the email response. We weren't cited because we had it in writing but we were made to change from that point forward. Now, I call my examiner directly and get it right from the start!

Return to Top
#373851 - 07/14/05 11:17 AM Re: Credit score disclosure - but we didn't use it
Anonymous
Unregistered

Quote:

does anyone sell to Freddie? Correct me if I am wrong, all scores go through thier system, and from what I understand, Freddie will not fully disclose thier approval system -- so they wont directly say if they look and the high and low score. Which tells me, you cant prove they dont use the score -- so you cant prove you dont use the score.



We sell to freddie mac and they do look at credit scores- they even show the credit scores and which one they "pick" to use as a basis for approval.

Return to Top
#373852 - 07/26/05 04:32 PM Re: Credit score disclosure - but we didn't use it
Trees Offline
Power Poster
Joined: Apr 2005
Posts: 4,013
FRB NY. The decision is still outstanding for us on this much discussed point. I will bring the matter up with exec mgmt to make the decision. It is not clear cut, by any means.

Return to Top
#373853 - 07/26/05 04:52 PM Re: Credit score disclosure - but we didn't use it
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,395
I don't understand the big balleyho on this. It's so easy just to go to the CB website and print the disclosure with the scores and reasons in borrower friendly language. They get what we get whether we "use" it all or not. Done deal. No examiner issues.

Return to Top
#373854 - 07/26/05 05:04 PM Re: Credit score disclosure - but we didn't use it
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
But it is so much easier, cheaper and a time saver to spend all these months to find ways around having not to provide a notice that in most cases can be printed with a simple push of a button and place in a envelope in a matter of just a few seconds.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#373855 - 07/26/05 05:13 PM Re: Credit score disclosure - but we didn't use it
Trees Offline
Power Poster
Joined: Apr 2005
Posts: 4,013
I guess the ballyho is the fact that we have to tailor the document in each case, whether they are a decline or not. It is my understanding that we need to mention the score and then provide other info that would require someone knowing what other info to include...am I misunderstanding this whole issue??? It didn't appear that black and white to me, because of the other info to include...that suggests some kind of "what I say and what you say may be different" scenarios and they can be time-consuming and very subjective.

Return to Top
#373856 - 07/26/05 05:20 PM Re: Credit score disclosure - but we didn't use it
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
The disclosure is written for you in section 212. You simply disclose the score and the factors (which are on the credit report) affecting the score. There's an easy fill in the blank form in the bankers tool section. We simply print it from our CRA which has all the information on it and all we have to do is stick in a envelope.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#373857 - 07/26/05 05:57 PM Re: Credit score disclosure - but we didn't use it
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,395
It IS black and white. The scores and the reasons for the scores are right there on the credit report. You're not suppossed to be disclosing your "read" of the credit bureau. You're telling the borrower what the credit bureau says, period. That way, if there's something WRONG on the credit bureau, the borrower can correct it and still get the loan.

Return to Top
#373858 - 07/26/05 09:01 PM Re: Credit score disclosure - but we didn't use it
Trees Offline
Power Poster
Joined: Apr 2005
Posts: 4,013
For my final foray into this subject pit, would anyone be kind enough to provide me with a sample of a report they sent to a customer, referencing the notice and then the score and reasons....I will show this to the seniors and then incorporate this into our process...send me a PM and I'll send my fax number. many thanks.

Return to Top
#373859 - 07/26/05 09:16 PM Re: Credit score disclosure - but we didn't use it
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Click here .

Also contact your CRA. They probably have an option to produce the disclosure for you when you pull the credit report. Ours does at no extra cost.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#373860 - 07/27/05 04:51 PM Re: Credit score disclosure - but we didn't use it
Trees Offline
Power Poster
Joined: Apr 2005
Posts: 4,013
Thanks for your help!

Return to Top
Page 2 of 3 1 2 3