1) Where can I find information about the permissible purpose requirement? Is something required to be documented in writing regarding permissible purpose or is verbal okay?

2) When did the key factor requirement become effective? Wasn't it part of the RBP notice requirments (which went into effect 1-1-11)? Is this correct? And mandatory compliance with this requirement was required as of what date?

1) To my knowledge, permissible purpose is addressed in section 604 of the FCRA. There is no implementing regulation on this section that I'm aware of, but there is commentary from the FTC in the July 2011 "40 Year of Experience with the Fair Credit Reporting Act".

2) To my knowledge, the key factor requirements have been around for a long time but more recently have been included in other notices/disclosures. The key factors have been required in the Notice to Home Loan Applicants (NTHLA) under FCRA section 609(g). The original RBPN requirements that went into effect 1/1/11 only had the key factors showing in model form H-3 (the credit score disclosure exception form for loans secured by 1-4 residential RE, essentially to allow this form to cover both the credit score disclosure requirement and the NTHLA requirements).

Then the credit score disclosure, key factors, and related information was added to model forms H-6 and H-7 under the most recent amendment to Reg V per the Dodd-Frank Act requirements (essentially compliance was required by 7/21/11). However, these amended model forms only apply if you are issuing RBPNs, instead of the credit score disclosure exception forms. At the same time (7/21/11), credit score disclosures with key factors listed began to be required on adverse action notices under Reg B, if the consumer report was used to take adverse action.

Others, please let me know if I'm missing something, but that is my understanding of the evolution of the use of key factors to date.

Thanks!

We have opted to use the alternate risk based pricing notices, and disclose to everyone if a credit report is pulled. I've noticed the key factors section of the notice are included on loans secured by 1-4 family RE, but no key factors are listed on the notice given for non-Re consumer loans. Based on the information you gave me, this would be correct? As you state that this information is not included on the credit score exception forms (which I believe is the same as the alternate notices I'm referring to). Am I understanding this correctly EmilyAnn (or anyone else)?

In particular look at the Gowan letter from the FTC. It is also referenced in the (unofficial) Commentary (40 Years...) as to permissible purpose.

Yes, the "alternate" RBPNs you are referring to are the credit score disclosure exception forms (model forms H-3 to H-5). Only the H-3 for 1-4 family res RE has the key factors.

I know we've beat permissible purpose to death on re-using an existing credit report on a loan, including the refinance of the same loan or a new loan say within 6 months of previously pulling a report.

Permissible purpose always speaks to obtaining a credit report. It doesn't speak to using an existing report on a new request made by the borrower which would otherwise qualify under 'permissible' purpose, other than the words "and no other". I know in my head this is the problem...but again, it makes no real logical sense except where pre-screening, marketing, etc come into play.

It's nearly impossible to explain to lending staff that when they are making a new loan 30 days form a prior loan why you really need to pull new credit every time. Sometimes, it involves an individual for business purpose, but because they are personnally liable, you pull a consumer report but may have multiple loans per month to that borrower. It upsets the customer as well.

In reading the "40 Years" and in reading Gowan and FCRA I cannot make the actual connect to using the existing report...only the fact you have to have a PP to have a report issued...how do you justify that this is truly the intention of the FCRA?

BTW, I'm waiting to look at our contract with the CB to see what it specifies, or if it is specific to this issue...but in the meantime...

I really have a tough time with this, and always have...if I can't convince myself that this is what FCRA actually speaks to, I have a hard time convincing others!