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#11237 - 11/20/00 06:49 PM FCRA & Title Reports
Princess Romeo Offline

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I have a question about the Q &A on the use of a Title Report or Title Search if the information contained in the report contributes to an adverse action on a loan request.

The Answer stated that the report containing tax lien, mechanics lien, and other lien information is considered a consumer report. I disagree with that answer. A report about the status of the title on property is simply a restatement of public record. Taxes and liens are all recorded documents. A Title Search is simply a search of public records pertaining to a particular piece of property.

The report does not contain information about the creditworthiness of a consumer. If a property has liens that would be superior to any lien for a new loan, a lender must consider that when assessing the adequacy of collateral. I do not believe that the finding of collateral as being inadequate would trigger an FCRA notice.

If so, this would throw the entire Title and Appraisal industry under the FCRA!

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General Discussion
#11238 - 11/20/00 11:03 PM Re: FCRA & Title Reports
RVFlyboy Offline
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I agree with this posting and disagree with the answer provided in the Q&A section of the Compliance portion of BankersOnline.com. In order to be considered a consumer report, the information has to, by definition, be provided by a consumer reporting agency (603(d)(1)). And a consumer reporting agency means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports (603(f)).
I would contend that the title company does not meet the standard of being a consumer reporting agency, and therefore the information provided by them, even if used to deny credit, would not be a consumer report. I may be wrong, but that's my opinion.

Jim Bedsole

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Opinions expressed are my own, and do not necessarily reflect those of my employer.

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#11239 - 11/21/00 06:23 PM Re: FCRA & Title Reports
Lucy Griffin Offline

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Your logic makes sense, but logic is not what drives this. The FTC does. The FTC has long taken the position that these reports are consumer reports within the meaning of the FCRA. The interpretation is not based on whether the information is generally publically available, but on the fact that the information is gathered, compiled, and sold and it reflects on the creditworthiness of a consumer. That makes the seller of such information a consumer reporting agency.

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#11240 - 11/21/00 06:41 PM Re: FCRA & Title Reports
Andy_Z Offline
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I was getting ready to throw in some definitions as Jim did, but I see that Lucy has already added her points.

I think it is important to distinguish that just because some information is public, that doesn't mean it isn't a "consumer report".

You may be addressing tax liens, as an example. And that could certainly influence your credit decision just as a charge-off would.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

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#11241 - 11/22/00 01:02 AM Re: FCRA & Title Reports
Princess Romeo Offline

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Again - I disagree that a Preliminary Title Report, which lists all information pertaining to a particular PROPERTY could ever be considered a CONSUMER report.

The information is not being gathered about a CONSUMER. The information being gathered is about what liens have been recorded on a piece of real estate.

In the same vein, if a lender requests a title check from the Department of Motor Vehicles, would that be considered a consumer report. A Title Check is not a report about the creditworthiness of an individual - it is simply a report on the status of the title to a piece of (personal) property.

If information about the worth or status of property, be it real property or personal property, would ever be considered a consumer credit report, then the entire Title Insurance and Appraisal Industry would be subject to the FCRA.

Put another way - if a consumer is creditworthy, but is requesting a home improvement loan of $10,000 - and the appraisal indicates the home is worth $100,000, and the Title Report indicates 1st and 2nd liens totaling $98,000 - would the decline for insufficient collateral trigger an FCRA disclosure?

And if so - would the appraiser be listed as a credit reporting agency or would the Title Company be listed as a credit reporting agency.

And if you so listed, would you become liable to the appraiser or Title Company for labeling them as something they are not?

_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

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#11242 - 12/06/00 09:53 PM Re: FCRA & Title Reports
Anonymous
Unregistered

quote:
Originally posted by Bonnie M:
Again - I disagree that a Preliminary Title Report, which lists all information pertaining to a particular PROPERTY could ever be considered a CONSUMER report.

The information is not being gathered about a CONSUMER. The information being gathered is about what liens have been recorded on a piece of real estate.

In the same vein, if a lender requests a title check from the Department of Motor Vehicles, would that be considered a consumer report. A Title Check is not a report about the creditworthiness of an individual - it is simply a report on the status of the title to a piece of (personal) property.

If information about the worth or status of property, be it real property or personal property, would ever be considered a consumer credit report, then the entire Title Insurance and Appraisal Industry would be subject to the FCRA.

Put another way - if a consumer is creditworthy, but is requesting a home improvement loan of $10,000 - and the appraisal indicates the home is worth $100,000, and the Title Report indicates 1st and 2nd liens totaling $98,000 - would the decline for insufficient collateral trigger an FCRA disclosure?

And if so - would the appraiser be listed as a credit reporting agency or would the Title Company be listed as a credit reporting agency.

And if you so listed, would you become liable to the appraiser or Title Company for labeling them as something they are not?


Within reason, I agree with Bonnie. Under the definition of Consumer Report within the FCRA, a title report does not have any bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living. A tax lien on a property owned by an applicant refinancing may have bearing if it is considered separately from the public records stated on the typical consumer report. However, in the case of a purchase money transaction, any tax liens or other encumbrances are the result of the current or prior owner(s) and would have no such bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living as defined by the FCRA. If someone has a link or information concerning FTC advisory opinions that state to the contrary, by all means, please post them for review.


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