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#2249996 - 03/02/21 11:34 PM Retirement income vs employment income
JoeG Offline
100 Club
Joined: Nov 2013
Posts: 122
DuPage county, IL
Would this underwriting practice be a violation?

Employed applicants approved for a car loan do not have to prove income if they have a FICO >=720.
Retired applicants approved for a car loan must always prove income, even if they have a FICO >=720.

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#2249997 - 03/02/21 11:41 PM Re: Retirement income vs employment income JoeG
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,637
Galveston, TX
Define "retired". Sure sounds like age discrimination to me regardless. I am 22 and work at McDonald and say I make $30,000 a year and I get to skate, but if I am 65 and say I get $30,000 a year from social security and a pension I have to prove it?
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#2250006 - 03/03/21 01:49 PM Re: Retirement income vs employment income JoeG
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,844
Bloomington, IN
I also think you have an issue with the following since you are "evaluating" income differently.

3. Consideration of income.

i. A creditor need not consider income at all in evaluating creditworthiness. If a creditor does consider income, there are several acceptable methods, whether in a credit scoring or a judgmental system:

A. A creditor may score or take into account the total sum of all income stated by the applicant without taking steps to evaluate the income for reliability.

B. A creditor may evaluate each component of the applicant's income, and then score or take into account income determined to be reliable separately from other income; or the creditor may disregard that portion of income that is not reliable when it aggregates reliable income.

C. A creditor that does not evaluate all income components for reliability must treat as reliable any component of protected income that is not evaluated.

ii. In considering the separate components of an applicant's income, the creditor may not automatically discount or exclude from consideration any protected income. Any discounting or exclusion must be based on the applicant's actual circumstances.
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#2250040 - 03/03/21 05:56 PM Re: Retirement income vs employment income JoeG
Rocky P Offline
Power Poster
Joined: Jun 2003
Posts: 7,424
Florida
Considering that "retired" is (generally) 62 +, which falls under the definition of Elderly, I would worry about 1002.6(2)b iv
(iv) In any system of evaluating creditworthiness, a creditor may consider the age of an elderly applicant when such age is used to favor the elderly applicant in extending credit.

Then look just above it at the definition of the "Effects Test"1002.6 a (2)
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#2250059 - 03/03/21 09:28 PM Re: Retirement income vs employment income JoeG
JoeG Offline
100 Club
Joined: Nov 2013
Posts: 122
DuPage county, IL
Thanks everyone for your input! I couldn't agree more that this practice should not be used.

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