A customer requested a $250K loan. We counteroffered for $220K based upon the appraised value of the home. The customer refused the counteroffer so we are sending an adverse action for "value of collateral not sufficient." We routinely give customers copies of appraisals. Reg B is covered. So far, so good.

Do we also need to give an FCRA notice concerning use of information from an outside source? We did not base the decision on a consumer report. It was only based on the appraisal. Does the FCRA even apply to appraisals? I know Reg B requires us to provide a copy to the customer.

This is the language from our adverse action letter:

"Our credit decision was based in whole or in part on information obtained from an outside source other than a consumer reporting agency. Under the Fair Credit Reporting Act, you have the right to make a written request, no later than 60 days after you receive this notice, for disclosure of the nature of this information."

I don't think we have to make this FCRA disclosure:

1. We informed the customer of the reason for the denial.
2. We gave the customer a copy of the appraisal.
3. I think it would confuse the customer into thinking that there is some other reason for the denial.

The FCRA AAN is only required if the consumer credit report played a roll in the adverse action.

Can "played a roll" be simply pulling the report?

For example, we pulled credit (800+ scores) - no problem there, but we counter-offer for a lower line amount based on insufficient value.

Does the source of information have to be disclosed on the AAN then?

I assume the counter offer was based on the value of the collateral only and not a combination of the credit report and the appraisal.

Simply pulling the report does not automatically have it playing a roll in the adverse action. If any of the information in the credit report was used in part or in whole in making the adverse action decision then the FCRA disclosure is required, if the credit report played no part in the adverse action then the disclosure is not required.

Your assumption is correct - only the value was the reason (he had a great score, not a factor at all).

Thanks for the help Dan(and for the link Loan Super)!!!