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#1534804 - 04/13/11 01:45 PM Adverse Action and Credit Score Disclosure
donna.raisor Offline
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Posts: 554
On a consumer purpose loan that is being denied should we provide the consumer credit score disclosure that provides their credit score, along with a range and credit bureau contact information.

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#1534808 - 04/13/11 01:48 PM Re: Adverse Action and Credit Score Disclosure donna.raisor
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Which credit score disclosure are you referring to? The one required by 609(g) or the RBP exception notice?
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#1534910 - 04/13/11 03:08 PM Re: Adverse Action and Credit Score Disclosure Dan Persfull
donna.raisor Offline
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THE RBP exception notice

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#1534914 - 04/13/11 03:12 PM Re: Adverse Action and Credit Score Disclosure donna.raisor
Dan Persfull Offline
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Bloomington, IN
The RBP exception notice is to be provided as soon as reasonably practical after obtaining the report. The consensus in the threads is that 3 to 5 days is reasonable.

If you provided the AAN within 5 days then the exception notice would not be required, unless the application is subject to the 609(g) disclosures. If you did not provide the AAN within 5 days then you should have either provided the disclosure in person or mailed it to the applicant.
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#1545664 - 05/04/11 05:47 PM Re: Adverse Action and Credit Score Disclosure Dan Persfull
Cornfed Turtle Offline
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Dan: Please tell me I've missed something.

For the loan products where your credit score can impact your rate, we provide the RBP exception notice. (We are going with the 3-5 day window as well.)

For denials, we have given the RBP exception notice prior to the AAN, so we are good.

Credit scores are not used to determine rate or anything else in our consumer products (car loans, home equity loans, etc) other than the 1st residential mortgages. We owe the 609(g) to the home equity folks and nothing to the car loan applicants. Is that correct? Can we give them the exception notice anyway?

I’m setting the scope for my audit and was informed that we are giving the “combo credit disclosure” on all consumer notes, secured, unsecured, whatever. I wasn’t even sure what the CCD was, but it looks like the RBP exception notice to me.

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#1545741 - 05/04/11 06:33 PM Re: Adverse Action and Credit Score Disclosure Cornfed Turtle
Dan Persfull Offline
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Bloomington, IN
The exception notice is provided to all applicants where the credit score is used. If it is not used then they are not required, however I will caution if the credit score is present in the credit report then you might be hard pressed to convince an auditor or examiner you don't use a score.

Quote:
“combo credit disclosure”


Not sure what you mean by this but if you are referring to the H-3 vs the H-4 and using the H-3 (Credit Score Disclosure & NHLA) for all applicants then you have a problem. The H-3 is for loans to be secured by 1-4 residential real property, the H-4 is for the others.
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#1545765 - 05/04/11 06:52 PM Re: Adverse Action and Credit Score Disclosure Dan Persfull
Cornfed Turtle Offline
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"...Somewhere in Middle Americ...
What our lenders ar calling the "combo credit disclosure" (???) does look like the H-3. I felt a problem as well.

We use the credit report to make a lending decision but it in no way impacts the rate, term or anything else, so I was not expecting to see any credit score disclosure in the car loan files. Obviously, I missed something. Thanks for clearing up for me.

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#1569579 - 06/24/11 03:44 PM Re: Adverse Action and Credit Score Disclosure Cornfed Turtle
cle Offline
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Posts: 161
Dan,

We use the RBP exception notice. We send our AAN out within the 3 to 5 days. Currently we send the RBP exception notice out with the AAN. Is there an issue with both notices automatically each time?

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#1571369 - 06/29/11 02:46 PM Re: Adverse Action and Credit Score Disclosure cle
travelgirl Offline
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Posts: 223
Minnesota
Starting to figure out how this is going to work in the real world. My vendor states they will be providing us the new version of the AA notice the first half of July. Since our credit reporting system is not integrated with our loan (and deposit) system it appears my staff will have to complete the "new" data fields on the AA notice manually by using the information contained on the credit score disclosure (incidentally we operate using the credit score "exception" notice vs. the RBP notice).

The proposal to Reg B states we will have to include on the AA notice (assuming we "use" a score) the following:

1) the score
2) range of possible scores
3) key factors
4) date the score was created
5) name of the person who provided the score

Herein lies my question, under Reg V 222.74(e) which dictates the RBP rules and what must be on the credit score disclosure for non-residential secured loans, it does not require that we provide the "key factors" that went into to determining the score. Only 222.74(d) does that for RE secured loans. As such, the credit score discosure I receive for non-real estate secured loans from my credit reporting agency does NOT contain the key factors.

How will I indicate on my AA notice what the key factors to the score are when I don't know? Will this be something I need to address with the credit reporting agency? Any thoughts?

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#1571694 - 06/29/11 07:01 PM Re: Adverse Action and Credit Score Disclosure travelgirl
Carolina Blue Offline
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Lost in a regulatory fog
If the credit agency is not going to update the disclosure then I guess you will have to get the factors directly from the credit report. Looks like for the time being our bank is going to have to manually complete the new AA notices.

I think there's going to be an adjustment period before everybody figures the details and banks, vendors, and credit angecies all get on the same page.

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#1573008 - 07/01/11 04:12 PM Re: Adverse Action and Credit Score Disclosure Carolina Blue
LaComplyLady Offline
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Louisiana
What is the difference in "Key Factors" and the Adverse Action Codes? It seems like the same to me.

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#1573921 - 07/05/11 07:25 PM Re: Adverse Action and Credit Score Disclosure LaComplyLady
Queen Mum Offline
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OK
I am curious as well as to what is going to be required as of July 21 on AA Notices. We give a copy of what the credit bureau provides. So will we have to populate all these fields again manually on each AA?

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#1573993 - 07/05/11 08:18 PM Re: Adverse Action and Credit Score Disclosure Queen Mum
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SC
Bump - I'm curious about this too. Do we have to send both the notice that the credit bureau gives us + include this same info on the AA notice? Seems like overkill but.....
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#1574329 - 07/06/11 04:37 PM Re: Adverse Action and Credit Score Disclosure Cowboys Fan
Queen Mum Offline
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Queen Mum
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OK
Our loan processing software has updated with the following:

We also obtained your credit score from XXXXXXXX and used it in making our credit decision. Your credit score is a number that reflects the information in your credit report. Your credit score can change, depending on how the information in your credit report changes.
Your credit score: XXX
Date: MM-DD-YYYY
Scores range from a low of ______ to a high of _______
Key factors that adversely impacted your credit score: _____


We have chosen to do the Exception Notices and we send a copy of the report from the Credit Bureau to the borrower. So even if we have already sent them the Exception Notice we still have to populate these fields on the AAN??

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#1574442 - 07/06/11 06:20 PM Re: Adverse Action and Credit Score Disclosure Queen Mum
NCBanker Offline
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I have been searching for the answer to this same question, so I hope someone can clarify. We also use the exception notice provided by the credit bureau. I'm trying to figure out how to populate the AAN. But it is the same information already given.

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#1574456 - 07/06/11 06:29 PM Re: Adverse Action and Credit Score Disclosure NCBanker
HRH Okie Banker Offline
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Oklahoma
I just mentioned in another thread that I believe that one combined form will be required and that we cannot use our Exception Notice in addition to the AAN. That is my take so far.
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#1574475 - 07/06/11 06:44 PM Re: Adverse Action and Credit Score Disclosure HRH Okie Banker
Compliance Newbi Offline
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Illinois
When I talked to our credit service, they told me to send the risk based pricing notice with the AA. Now I am so confused!!

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#1574607 - 07/06/11 08:39 PM Re: Adverse Action and Credit Score Disclosure donna.raisor
isaidno Offline
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I don't claim to be an expert, but I took a training course last week and if I have it right, nothing changes with the RBPN or the exception notice. What changes is if you use the credit score for denial purposes, then you will need to redisclose the credit score and the reasons from the bureau on the AAN.

They warned about the appraisals coming in undervalue and if you make a counter-offer, the rate could be affected because of the credit score because the DTI or LTV causes the increased rate.

They also warned about the fact that you may need to send two AAN. The primary borrower's score may not have affected the APR, but the secondary borrower's did. You would leave the score off the primary's AAN and put it on the secondary's AAN.

Also, if you use the NOIA letters and their credit is awful and you know that the reason for this is the score, you would need to send out an AAN for the poor credit score even though you have the protections with the NOIA it doesn't cover the credit score.

Hope this helps. Like I said, I am not an expert, just reading from my material and notes.
Last edited by isaidno; 07/06/11 08:41 PM.
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#1574628 - 07/06/11 09:00 PM Re: Adverse Action and Credit Score Disclosure isaidno
raitchjay Online
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This line brings up an old issue: "A creditor that obtains a credit score and takes adverse action is required to disclose that score, unless the credit score played no role in the adverse action determination. If the credit score was a factor in the adverse action decision, even if it was not a significant factor, the creditor will have used the credit score for purposes of section 1100F of the Dodd-Frank Act."

I had internally accepted the fact that, ok, if there's a credit score, disclose it on the AAN. This has me thinking about that all over again, especially the "...if the credit score was a factor in the adverse action..." part. If it was a "factor", wouldn't one of your Reg. B reasons marked need to reflect that? So again, if you have a credit score, but your solitary reason for denying the loan is "insufficient collateral", are you still making sense by disclosing the score when the model language says "We also obtained your credit score from this consumer reporting agency and used it in making our credit decision"????? If we "used" it, it must have been a "factor" and there ought to be an AAN reason (not the 4-5 key factors on the credit score part) that correlates. So you end up with a consumer with an 800 credit score that you denied for insufficient collateral and for all the world your AAN seems to be saying "we denied you at least in part because of your credit score".

ETA: The old argument (and i'm not saying i disagree, just throwing this out there because of what i see in the Fed's comments) was that if you obtained a credit score, then you were "using" it. Fair enough. This seems to be saying though that you should disclose the credit score only when you "use" it to take adverse action.
Last edited by raitchjay; 07/06/11 09:38 PM.
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#1574768 - 07/07/11 01:21 PM Re: Adverse Action and Credit Score Disclosure raitchjay
ahkcompliance Offline
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Midwest
My intital assumption was that we will just put the credit score on all adverse action notices. But after reading, you only put on AAN if it was a factor. In my opinion, if we deny based on insufficient collateral then it would not go on the AAN, but we would still provide the credit score exception notice.

However, if we deny based on anything in the credit report, then we would provide the score on the AAN and still provide the exception notice.

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#1578356 - 07/14/11 09:27 PM Re: Adverse Action and Credit Score Disclosure ahkcompliance
Charles Everson Offline
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Overland Park, Kansas
Re: the "key factors that adversely impacted your credit score" on the new adverse action notice...

Where do we come up with this? Is the lender just supposed to eyeball the credit report and come up with a few key phrases?
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#1578426 - 07/15/11 06:18 AM Re: Adverse Action and Credit Score Disclosure Charles Everson
rlcarey Offline
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Galveston, TX
The credit bureaus routinely print the reasons on all credit reports that contain a score. The bank would not know what they are unless the credit bureau provides the information, unless you know the exact formula used to derive the credit score.
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#1578466 - 07/15/11 12:51 PM Re: Adverse Action and Credit Score Disclosure rlcarey
ahou Offline
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Ok, the final rule has been published in the fed register. The effective date is stated as 8-15-11. I assume that is the mandatory compliance date?
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#1578474 - 07/15/11 01:13 PM Re: Adverse Action and Credit Score Disclosure ahou
rlcarey Offline
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Galveston, TX
The effect date is 7/21/11 by law (Frank Dodd Act). The effective date for use of the model forms is 08/15/11.

Pick your poison.....
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#1578597 - 07/15/11 02:59 PM Re: Adverse Action and Credit Score Disclosure rlcarey
Oursisnottoreasonwhy Offline
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Oursisnottoreasonwhy
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Central Illinois
If you don't pull a credit score what model form is the correct one to use for AAN?

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