Our institution has 3-year revolving lines of credit that borrowers draw on for the three year term and they mature at the end of the three years. At maturity, we reconsider their credit history and financial position in determining whether or not we are going to renew the LOC. My question is, do we have to obtain a new authorization to pull their credit bureau report at this time or can you rely on previous authorization?

I think there are some things to consider here.

Who is the borrower? Is the borrower an entity and the CBR is being obtained on the guarantor, or is the borrower an individual and just business purpose loan?

What happens at the end of the 3 year maturity if you don't perform a review? Does the borrower need to come in and sign new documents to renew?

https://www.ftc.gov/sites/default/f...ary-interpretations/110720fcrareport.pdf

57. Relevant legislative history explains that “[t]he permissible purpose created by this provision, however, is
limited to an account review for the purpose of deciding whether to retain or modify current account terms.” S.
Rep. No. 104-185 at 35 (1995).

The borrower is an individual but the loan is a business purpose. The borrower signs a new note and security agreement with the renewal.

Dan, if I am reading this correctly, does that mean that we can rely on the existing agreement?

You stated the account was a revolving LOC which I assume is an open-end LOC. If so you have a permissible purpose to obtain a consumer report to determine if you want to continue the relationship. This is also assuming the consumer whose consumer report you are obtaining is personally liable on the debt. If not then you would need their permission to obtain their consumer report.

This permissible purpose for account review does not apply to closed-end credit.

That's where it gets tricky for me to understand. It is a three year note that they draw on throughout the three years. It has a maturity date at the end of the three years. When we renew the loan, we obtain a new note with a new maturity date. The new note references the old note with a statement that "this agreement is issued as a renewal and extension of the obligation dated (date of previous note)....

Credit cards have expiration dates ranging from 1-3 years. HELOC draw periods generally expire between 10-15 years. Your open-end credit account expiring every 3 years would not be any different.

The maturity date of the obligation does not define if it's open-end credit. Open-end credit is defined in Reg. Z at 1026.2(a)(20).

We cannot seem to correctly document that a commercial loan customer (borrower or guarantor) is given or signed an authorization to obtain a consumer credit report prior to closing. I know that there has been a lot of discussion about this. I could not find a strong statement from the FDIC acknowledging that it is a permissible purpose to obtain a consumer credit report on the guarantor or borrower on a commercial loan.

The NCUA has this old guidance from 2001 (and I did not see it revoked): https://www.ncua.gov/regulation-sup...e-consumer-credit-reports-business-loans

But, in the 1st Q 2015 Consumer Compliance Outlook the FDIC states A creditor always has a permissible purpose to obtain a credit report if the consumer authorizes it in writing. If a creditor is unsure if it has a permissible purpose for a business purpose loan for which the consumer is a guarantor or co-obligor, it has been an acceptable practice for the creditor to include an authorization to access the consumer’s credit report in the credit application or in a separate document.

I want to eliminate all references to getting written permission, but am afraid to pull the trigger. How are you handling this?

This all goes back to the Tatelbaum letters.

If they are going to be personally liable on the debt, you have a permissible purpose. If they are not - you need written permission.

https://www.ftc.gov/policy/advisory-opinions/advisory-opinion-tatelbaum-06-22-01

https://www.fdic.gov/news/financial-institution-letters/2001/fil0161a.html