Please help me sort this out.

I have discovered an officer who receives on-line applications on occasion where the applicant does not check the box in the software which says the applicant gives permission to pull a credit report.

I am aware that no written or special verbal permission is needed to access credit if the applicant submits an application (outside of perhaps an investor requirement).

The officer makes a few attempts to contact the applicant with no success and then the application stays in the officer's "pipeline", I assume. And then months later, the officer sends a denial with a reason of "application incomplete."

But if a credit report had been pulled, there may have been actual reasons for denial from a credit standpoint, or even a DTI calculation, since the debt information comes from the credit report.

Can I have some feedback about this?

And then months later, the officer sends a denial with a reason of "application incomplete."


They have 30 days to do that.

THANK YOU!!

So change the scenario a bit. The officer receives an application for a prequalification request (no property address - the applicant is shopping), pulls credit, analyzes DTI.....everything is a go at this point, no reason to deny. And perhaps, the officer HAS contacted the applicant and the applicant several times and the applicant is still looking (shopping). And THEN the applicant ceases to respond. We deny because the application is incomplete, but it might be more than 30 days since the initial application came in.

Is that OK?

You approved the preapproval request. You are done whether they come back or not, until they submit the formal application.

Pardon my continued ignorance. So.....the applicant never comes back, never responds to the officer's attempt to contact. These files would then only be subject to Reg B's record retention requirements? And we would not provide the borrower with any sort of Reg B notice?

We've been sending a denial for incomplete application.

Further, if the scenario was a HMDA-reportable application with an address, and the applicant never came back, how would we report that? It's not withdrawn because the applicant didn't expressly withdraw it. It's not approved-but-not-accepted because we had not verified everything. Seems denying for incompleteness is the only option.

1. They apply for a preapproval
2. They give you everything you need
3. You tell them they are preapproved up to $
4. You are done.- the preapproval application process is completed.

Randy, I appreciate your help, as always.

I know this discussion is focusing on a couple different regulations but I wanted to offer a thought about the original process you described where a customer doesn't check the box to have credit pulled but credit gets pulled anyways. From an FCRA perspective, sure you are good to pull but this creates a false choice for the customer.

Give consent - credit is pulled
Don't give consent - credit is pulled anyways

Seems like the potential for deception. I have seen consumers complain about this and some more knowledgeable try to argue for FCRA. If the customer really doesn't have a choice why pretend like there is one?

I agree, inspector, but our online software incorporates the question....can't take it out. Usually, when the applicant doesn't check the box, the loan officer contacts the applicant to say that the bank cannot evaluate the application without access to a report.

The FCRA doesn't require permission or notification before pulling a credit report (other than for employment reasons). If you apply, I can pull your credit report. It's that simple.

The section does not require that the user provide any kind of advanced notification to consumers before a consumer report is obtained [§615(c)#2].

The "problem" is that some people want to have their cake and eat it too. They want to know if they qualify for a loan but they are concerned about the credit score, so they try to tell the loan officer not to pull their credit report. When I get asked about this, I explain that the applicant doesn't get to decide how you process applications. If they want to apply, you pull their credit report. If they don't want their credit report pulled, tell them to not apply.

Swiggles: I know you already addressed this, but the application online is creating a problem that shouldn't exist. I would contact the vendor and ask them to remove it.