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#2071174 - 03/28/16 03:45 PM Credit Score Disclosures when using DEALERS
J Offline
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Joined: Jun 2014
Posts: 14
Sorry this is so long, I tried to put details in this!

I'm reading this part of the Reg based on purchases-
"(2) Purchasers or assignees. A purchaser or assignee of a credit contract with a consumer is not subject to the requirements of this subpart and is not required to provide the risk-based pricing notice described in § 1022.72(a) or (c), or satisfy the requirements for and provide the notice required under one of the exceptions in § 1022.74(d), (e), or (f).

(3) Example. A consumer obtains credit to finance the purchase of an automobile. If a bank or finance company is the person to whom the loan obligation is initially payable, the bank or finance company must provide the risk-based pricing notice to the consumer (or satisfy the requirements for and provide the notice required under one of the exceptions noted above) based on the terms offered by that bank or finance company only. The auto dealer has no duty to provide a risk-based pricing notice to the consumer. However, the bank or finance company may comply with this rule if the auto dealer has agreed to provide notices to consumers before consummation pursuant to an arrangement with the bank or finance company, as permitted under § 1022.73(c). "

My situation- the company I work for has a bunch of dealers that we "purchase from". The contracts that are used are OURS. We approve/deny all applications. We collect. We issue the funds to the dealer immediately upon funding. The wording on the contract states that the dealer is the "seller" and we are the "assignee".
The approval is usually based on a tiered format, based on credit score and amount financed. There are generally 3-5 tiers, depending on the type of product the dealer sells.
When reading the excerpt above, it states there's an exemption for assignees. My concern is that are we REALLY an "assignee" in this situation? Our dealers send nothing, look at nothing, etc. They only gather the documentation we need, basically.

Bottom line question- Do we need to be sending these customers the Credit Score Disclosure (H-4)?

Any input would be appreciated!

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#2071491 - 03/29/16 08:29 PM Re: Credit Score Disclosures when using DEALERS J
Bibliofiend Offline
100 Club
Joined: Feb 2006
Posts: 128
DuPage County, IL
My stab at this.

If it walks like a duck......

To me the RBP notice should be given by the entity that sets the rate based on its risk criteria. That's your bank, not the auto dealer. So you should give the notice.

IMO, if the dealer is the one that sets the rate based on its criteria AND THEN ASSIGNS THE CONTRACT TO YOU, then you would be able to claim the exemption.

But I'm not an examiner, nor do I play one on TV.

Good luck!
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