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#2163808 - 02/09/18 01:30 AM Credit disclosure notice- don't RBP
M&M Offline
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Joined: Nov 2003
Posts: 530
Midwest
Are we required to provide a credit score disclosure on a non-real estate secured loan if we don't do risk-based pricing?

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#2163813 - 02/09/18 11:56 AM Re: Credit disclosure notice- don't RBP M&M
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Define "credit score disclosure"?
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2163818 - 02/09/18 12:54 PM Re: Credit disclosure notice- don't RBP M&M
M&M Offline
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Joined: Nov 2003
Posts: 530
Midwest
A notice outlined in 1022.74(e)1ii that contains the following:

(A) A statement that a consumer report (or credit report) is a record of the consumer's credit history and includes information about whether the consumer pays his or her obligations on time and how much the consumer owes to creditors;

(B) A statement that a credit score is a number that takes into account information in a consumer report and that a credit score can change over time to reflect changes in the consumer's credit history;

(C) A statement that the consumer's credit score can affect whether the consumer can obtain credit and what the cost of that credit will be;

(D) The current credit score of the consumer or the most recent credit score of the consumer that was previously calculated by the consumer reporting agency for a purpose related to the extension of credit;

(E) The range of possible credit scores under the model used to generate the credit score;

(F) The distribution of credit scores among consumers who are scored under the same scoring model that is used to generate the consumer's credit score using the same scale as that of the credit score that is provided to the consumer, presented in the form of a bar graph containing a minimum of six bars that illustrates the percentage of consumers with credit scores within the range of scores reflected in each bar, or by other clear and readily understandable graphical means, or a clear and readily understandable statement informing the consumer how his or her credit score compares to the scores of other consumers. Use of a graph or statement obtained from the person providing the credit score that meets the requirements of this paragraph (e)(1)(ii)(F) is deemed to comply with this requirement;

(G) The date on which the credit score was created;

(H) The name of the consumer reporting agency or other person that provided the credit score;

(I) A statement that the consumer is encouraged to verify the accuracy of the information contained in the consumer report and has the right to dispute any inaccurate information in the report;

(J) A statement that Federal law gives the consumer the right to obtain copies of his or her consumer reports directly from the consumer reporting agencies, including a free report from each of the nationwide consumer reporting agencies once during any 12-month period;

(K) Contact information for the centralized source from which consumers may obtain their free annual consumer reports; and

(L) A statement directing consumers to the Web site of the Bureau to obtain more information about consumer reports.

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#2163826 - 02/09/18 01:33 PM Re: Credit disclosure notice- don't RBP M&M
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
If you don't meet the requirements outlined in 1022.70(a), then none of Subpart H applies.

If you don't risk based price - i.e., everyone gets the same rate regardless of their credit standing - none of the rest of Subpart H applies.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2163835 - 02/09/18 02:30 PM Re: Credit disclosure notice- don't RBP M&M
M&M Offline
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Joined: Nov 2003
Posts: 530
Midwest
Thanks Randy. We do have the disclosure since it prints with our credit bureau on real estate loans, but auditors were dinging us for not having documentation of when the disclosure was provided on non-real estate loans. but if the disclosure isn't required, don't think that's a valid issue.

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#2165259 - 02/21/18 01:19 AM Re: Credit disclosure notice- don't RBP M&M
M&M Offline
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Joined: Nov 2003
Posts: 530
Midwest
Our auditors are still telling us that we need to be providing the credit score disclosure on non-real estate loans, even though we don't risk base price. We have it in the file (it prints with each credit bureau), but we don't have any evidence of it being delivered and when. Is there a separate credit score disclosure that is required under a different section other than subpart H in FCRA? Am I missing something here?

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#2165260 - 02/21/18 01:27 AM Re: Credit disclosure notice- don't RBP M&M
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
No.

Subpart H—Duties of Users Regarding Risk-Based Pricing
Sec. 1022.70 Scope.

(a) Coverage. (1) In general. This subpart applies to any person, except for a person excluded from coverage of this part by section 1029 of the Consumer Financial Protection Act of 2010, Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111–203, 124 Stat. 137, that both:

(i) Uses a consumer report in connection with an application for, or a grant, extension, or other provision of, credit to a consumer that is primarily for personal, family, or household purposes; and

(ii) Based in whole or in part on the consumer report, grants, extends, or otherwise provides credit to the consumer on material terms that are materially less favorable than the most favorable material terms available to a substantial proportion of consumers from or through that person.

If you aren't risk based pricing, there is nothing.

Give them this citation and demand a citation that supports their hypothesis.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2165261 - 02/21/18 01:30 AM Re: Credit disclosure notice- don't RBP M&M
M&M Offline
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Joined: Nov 2003
Posts: 530
Midwest
Thanks Randy. This is the section I discussed with them in detail, but I'll copy and send this to them and ask them to show me. They're currently citing 12 CFR 1022.74(e)(1), which clearly doesn't apply if we don't RBP.

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#2165270 - 02/21/18 01:42 PM Re: Credit disclosure notice- don't RBP M&M
Adam Witmer Offline
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Joined: Sep 2010
Posts: 2,658
I agree with Randy 100%. If you don't price on risk, then neither the RBP notice nor the exception notice are required.

The Fed put the rule in plain English in the 1st quarter 2012 edition of their Consumer Compliance Outlook publication:

3. If the same rates are charged to all approved applicants for a particular product, do notices need to be provided?

As discussed in §1022.74(a)(1), if a lender offers one rate for a product and the applicant either receives that rate or is denied, no risk-based pricing or exception notice is required for approved applicants but an adverse action notice is still required for denied applicants.


The full publication can be found here: https://consumercomplianceoutlook.org/2012/first-quarter/risk-based-pricing-notice-requirements/
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Adam Witmer, CRCM

All statements are my opinion, not those of my employer, and should not be taken as legal advice.
www.compliancecohort.com

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