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#2025184 - 07/03/15 07:06 PM stress testing consumer portfolio (mtg)
Chocaholic Offline
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Joined: Aug 2005
Posts: 443
Northwest
We recently had a safety and soundness exam where the regulator suggested rather than risk weighting for our stress test based on older data (appraisal) we could update credit scores and risk weight that way using the same tool as if we were doing a credit card mailing.
In my mind there is no permissible purpose for pulling the scores... has anyone else out there experienced this... or have other thoughts.
Credit Bureau indicates we could purchase updated scores for our list of consumer accounts.
Your help is appreciated.
Last edited by Chocaholic; 07/03/15 07:09 PM.
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#2025276 - 07/06/15 01:21 PM Re: stress testing consumer portfolio (mtg) Chocaholic
osucpa Offline
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Joined: May 2011
Posts: 1,403
There is no specific method to performing stress testing at the present time. Let's say you have A,B,C and D ratings within your consumer portfolio. You could stress test each of these areas based on your criteria.

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#2025446 - 07/06/15 08:28 PM Re: stress testing consumer portfolio (mtg) osucpa
Chocaholic Offline
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Joined: Aug 2005
Posts: 443
Northwest
I understand however, currently we use appraised value as one of our criteria and since we do not get appraisals updated the FDIC ( S&S) suggested we use credit score as one of our criteria that could be updated... , My question is since I don't feel there is a permissible purpose for pulling this score.. i.e. we are not going to extend additional credit, we are not concerned with deteriorating credit etc... that the compliance arm my criticize our using the score in this manner. Was wanting to know if others were doing this or if they had an opinion on any issues.

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#2025454 - 07/06/15 08:38 PM Re: stress testing consumer portfolio (mtg) Chocaholic
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 80,341
Galveston, TX
Ask the FDIC that while giving serious consideration to their suggestion, you were wondering about the implications under the FCRA for pulling a credit report for review purposes based on the FTC staff opinion:

" Staff believes that the “review” permissible purpose applies only where the creditor has an existing account relationship with the consumer and uses the report solely to decide whether to modify the terms of the account."

Remember, the examiner making this recommendation was most likely a safety and soundness examiner and not a compliance examiner. I would get clarification from the FDIC regional office before jumping headlong into such a process.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2025487 - 07/06/15 11:06 PM Re: stress testing consumer portfolio (mtg) rlcarey
Chocaholic Offline
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Joined: Aug 2005
Posts: 443
Northwest
Thank you, that was my thought as well

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