Our FI has just began making consumer purpose real estate loans secured by dwellings. We want to ensure that we are delivering the proper disclosures.

We offer a flat rate on all products, regardless of credit score (no tier). However, if the score if below 650, we deny the application. If we see serious delinquencies or collections, we will also deny the applicant. We do not offer any other rate or product based on these terms; either you hit the score requirement or you don't.

Is this considered Risk Based Pricing? We have been sending the H-3 and Notice to Home Loan Applicant, but I am not sure that this is correct. Should we be providing different disclosures (for all applicants when a score/report is used or just when the application is denied)

Thank you for the guidance. We all start somewhere in the compliance world!

Is this considered Risk Based Pricing?

No, the rate is not based on the use of the score or the information contained in the consumer report.

So, should we be providing any notice in reference to the credit report being pulled? Is the only disclosure necessary the Notice to Home Loan Applicant--even on Adverse Action (Reg B).

The NHLA & Credit Score Disclosure in 609(g) are separate requirements from the RBP Notice requirements. If the credit score was used in whole or in part in the credit decision it has to be disclosed.

We are using model H-3 for the credit score disclosure. Is this permissible if we do not do risk based pricing?

Bump

Yes, see §1022.74(d) or (e) of Regulation V as well as the following link:

https://consumercomplianceoutlook.org/2012/first-quarter/risk-based-pricing-notice-requirements/

Model forms H-3, H-4, or H-5 can be used instead of a risk-based pricing notice.

That wasn't really the question at hand, but thank you for that forgotten about article as it answered my actual repeat questioning of my own madness! :D~!

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.

Follow-up to this thread . . .

As 609(g) is related to loans secured by a 1-4 family dwelling, and the RBPN/Credit Score Exception Disclosure is only used when terms are based on the consumer report, is there any FCRA disclosure necessary for loans that are not dwelling secured and do not operate under a premise of terms set based on the information in the consumer report? Is there any notice required just because the consumer report is pulled?

If the lender does not risk based price, then only the AAN would come into play, as applicable.

Thank you for your input!

I believe that we may have been doing this wrong for quite some time. We do not risk base price any consumer loan. We use the report to make a credit decision (if the score is lower than 680, if there are serious delinquencies/collections, etc. we deny the loan)

We provide the Notice to Home Loan Applicant to all consumer dwelling secured loans (approved and denied).
We also provide a Credit Score Disclosure Notice anytime that we pull a credit report for a consumer loan (approved and denied).
If the loan is denied, we provide an Adverse Action Notice.

What are we doing incorrectly?

Well, if you do not vary your pricing - if a consumer loan is just either approved or denied and everyone gets the same price, then Subpart H of Regulation V does not apply to your bank and a risk based pricing notice or exception notice is not required.

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.

So, we should continue to provide the NTHLA for dwelling secured consumer purpose loans?
Do not provide Credit Score Disclosure notice on any of our loans since we do not RBP?

Are there any additional Adverse Action disclosure requirements for consumer purpose loans? Dwelling secured or not?

Notice to Home Loan Applicant:
In connection with your application for a home loan, the lender must disclose to you the
score that a consumer reporting agency distributed to users and the lender used in connection
with your home loan, and the key factors affecting your credit scores.

How are we supposed to disclose this information?

There are a number of samples on the internet:

http://home.michiganmutual.com/forms/Compliance%20Disclosures/Fact%20Act.pdf

Your mortgage doc generation platform should have one available.

Thank you! Our software does not provide really anything accurate in terms of consumer lending....I won't go there.