These Risk-Based Pricing Notices are going to be the end of me!
We always use the best rate to set pricing.
If you have two applicants, and one is tier A and one is tier B...does tier B get a Notice even if we didn't use their score to determine the rate?
Likewise, if one is tier B and one is tier C, does only tier B get a notice, because that is the rate we used to determine the rate, or does tier C applicant also get one?

My question is why would you not just be using the exception noticea like 99% of the other lenders and then you would not have to worry about it?

I am proposing that, but I have to explain the risk-based pricing aspect as well.

See the Multiple Consumers paragraph:

https://consumercomplianceoutlook.org/2010/fourth-quarter/risk-based-pricing/

I spotted that. It says that I can provide one RBPN to the attention of all applicants if they are all at the same address. However, the final rule states that any one applicant can't receive the notice with any of the others' scores, so I am not sure how to proceed. Can we just give every applicant for every loan their own RBPN?

Page 5 of https://www.govinfo.gov/content/pkg/FR-2010-01-15/pdf/E9-30678.pdf

"Multiple Consumers. The final rules contain a rule of construction to clarify that in a transaction involving two or more consumers
who are granted, extended, or otherwise provided credit, a person must provide a risk-based pricing notice to each consumer.
If the consumers have the same address, a person may satisfy the requirements by providing a single notice addressed to both
consumers. If the consumers do not have the same address, a person must provide a notice to each consumer."

We use the Exception Notice and we provide each applicant their own copy mailed in separate envelopes.

Thanks Dan - if we mail it Day One, and the loan closes same day or next - - is there concern that it may not be considered provided prior to consummation?

In those cases we hand deliver the notice.

rlcarey, in this thread you state, " why would you not just be using the exception notice like 99% of the other lenders and then you would not have to worry about it?"

If the lender is using the credit score to determine the rate wouldn't the lender need to provide the H-6 notice or H-1 depending on the situation? Could you please expand on your statement as I thought the exception notices were to be used when rates weren't used to determine the rate.

If credit scores are not used to set rates, there is no risk based pricing disclosures required. Most banks that are risk based pricing deliver the H-3 or H-4 (depending on the loan type) and those are just delivered to everyone. No tier tracking required.

rlcarey, I see...we typically delivered the H-3 or H-4 because we were not using any tiers but we are going to implement tiers for our consumer auto loans and we will be utilizing H-6.

Then I am confused - you do not risk base price, but are delivering the H-3 and H-4 to consumers?

We are delivering H-3, H-4, or H-5 since these are the exception to risk based pricing notices. If we are not to be using H-3 - H-5 when not using risk based pricing, then what credit score disclosure form should we be using?

None of them. The Notice to Home Loan Applicant would need to be sent on home loans, if you use a score in the decision making process.

When do institutions utilize the H-3 - H-5 notices? I don't mean to ask a stupid question but we do use the Notice to Home Loan Applicant combined with the H-3 - H-5 notice, depending on the situation, to cover the credit score disclosure exception notice to risk based pricing.

I get the feeling we are doing this incorrectly but when we have been monitored by an outside source they too ask if we are using the exception to risk based pricing notice since we don't credit score.

Confused now.

It all goes back to the scope of Regulation V - 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.

So, if you are not pricing your loans based on information from the credit report, this whole subpart of Regulation V does not apply.

You still have to comply with Section 609(g) and the Notice to the Home Loan Applicant.

If you are subject to 1022.70, etc., then for mortgage loans, you would use Model H-3 which includes the required Section 609(g) disclosure.

Using both the Section 609(g) Notice to the Home Loan Applicant and Model H-3 is totally a duplicative disclosure effort.

Thanks rlcarey for the clarification.

Ugh - now I am confused. We have a rate sheet for car loans. If your credit score is less than a certain number, we add .50% to your rate. I think that is risk based pricing. We are giving everyone the credit score exception notice.

Should we be giving the RBPN to those who are being charged the extra .50%?

You either give a Risk Based Pricing Notice to those that are negatively impacted or the exception notice is given to everyone.

OK so does anyone use RBPN? It seems like a pretty crazy rule to give such a huge exception. (I should add I am being sarcastic.)

Thanks for your help Randy!

I have never personally run across one that did. Too much recordkeeping and calculating and recalculating and chance of error to really bother.

New to compliance but what exception notice are 99% of banks using?

We were discussing the use of Models H-3, 4 and 5, versus Model H-1.

https://www.bankersonline.com/regulations/12-1022-apph