We received notice today from an investor stating the following:

"Effective January 1, 2011, a new federal law will require all borrowers to be provided with the Risk-Based Pricing notice [They say RBPN, but they are really referring to the credit score notice] within 3 business days of having credit pulled. [...] The Risk Based Pricing notice must evidence it was provided to the borrower within 3 business days of credit being pulled."

Has anybody else heard anything from their investors expecting file documentation above and beyond the regulatory requirements?

I think they are talking about the General Notices (H3-H5), which are supposed to be given out as soon as "reasonably practicable" after the credit score is obtained (3 business days).

The Risk-Based Pricing Notices (H1-H2) should be provided after the credit decision has been made, but before loan consummation.

They are talking about the credit score exception notice. They said that they're considering our concerns and will have a response ready by the end of the week. I hope it's reasonable.

We saw the same thing from one of our investors and have brought it up with them. One thing I noticed is that they seem to assume that everyone will use the exception notice. Has anyone else come across that with an investor?

Why is 3 days not reasonable...we require "within 2 days".

When we obtain the credit report, we mail the notice.......unless, it's a loan type that will close within three days. Then, mailing won't work.....has to be provided prior to consummation.

We do prequalifications. The disclosure is not generated until the credit reports are uploaded to the LOS. We do not want to upload any of our credit reports from prequals until they become "applications." Asking us to provide the disclosure within 3 business days of pulling credit is unreasonable for our operations.

Now, if they had said 3 business day from application, that would be different.

Even if investors agreed to wait....I'm not sure examiners would agree that you're providing the notice timely.....especially if a lot of time elapses between the prequal stage the application stage. What will you do if the prequal never becomes an application? How will you provide the notice then?

I don't see how this would be a timely notice.

Hmmm.. Well there is a notice that is provided with the credit bureau pull, but it doesn't appear to be in compliance with the model format requirements.

The best we could do is mail the disclosure within three business days as is from the credit bureau pull, and then (if they make it this far, which most do) once they get loaded into the the system after the "application" has been received, then we could generate the notice through the LOS in the correct model format.

For those that get denied, we'd have to just say that they got what we could make available.

I've been reading different posts about credit bureau providers who are providing notices "not in compliance", etc. I ask this totally out of curiosity......why would a company provide a non-compliant notice when all they have to do is look at the models and follow those? That makes no sense at all to me.

All I can say is that they just don't get it. Not to mention, when you talk to somebody they're a sales rep who isn't really in-tune with understanding the fine technical details. They're also (my experience) late at jumping on this, and receiving most of their education from unsastified compliance officers (like me).

It's really annoying.

From what my rep told me (and I got ours changed by forwarding info from the appendix), their forms vendors have tried to just tweak what they already have, since the "model forms would require way too much time and expense" to change their system. So they made what tweaks they could and had their legal department look at it. Trouble is their legal department has no experience dealing with the regulatory agencies of banks. Nor do they understand that when a bank reg agency says substantially similar, it generally means exactly the same as the model forms (ex--the OD Fee disclosure grid lines on statements last January). I had to emphasize that any deviation from the model forms could result in my examiner making a subjective personal opinion that we are not in compliance, and that was not something I wanted to risk on something so simple just because it was too "difficult" for them to change their system.

The best thing to do if you are still getting push back from the CRA to change the form, is to highlight and supply them the parts of the appendix that talk about permissible changes and unpermissible changes. It doesn't hurt to throw in comments like "I really want to use your form, but if you don't change it, we'll have to go a different route." They don't have to know that the different route probably means you will do it in-house....

The form supplied by the CRA we use looks nothing like the model forms, but in reading Appendix A, I think that the forms are compliant as designed. I'm dissapointed that the forms do not exactly resemble the model forms, but there's really nothing I can do about it.

Yes, what we are receiving from our CRA is nothing close to the model form
But here is where the CRAs are coming from.

in the Form of the Notice section of the final rule it says
"... creditors are deemed to be in compliance with ...[when they use] the appropriate model forms. Use of the forms is optional." end quote

As far as the timing, I am completely confused as to requiring it as an early disclosure item?????

1. The overall intent of this part of FACTA was to inform someone when they receive a loan where the material terms are substantially less favorable ...
2. Therefore if someone has not received a loan (denial, withdrawn, they go with another lender, etc) there is no need for a notice.

3 The final rule does expand this logic a little and the Timing of the Notice section says
"... after the terms of the credit have been set, but before the consumer becomes contractually obligated on the credit transaction."

With the amount of 'adds' and 'take aways' that the Secondary Market has on their pricing (add a 1/4 for score of XX, add an 1/8 for LTV over Z, etc) I don't see how it could be an initial disclosure In the Real World ???????