I'm getting back on the saddle again after 8 years away from consistent compliance involvement, and I was hoping I could get some feedback on my thought process and told if I'm way off base.

1. Initial credit report expires during process and we pull new one (with their permission). I state we cannot charge for both the old and new because we don't collect for the ones that aren't originated and that wouldn't be fair.

2. Client requests us to pull new credit during processes because they believe their credit has improved. I state we could charge them for both the original and new report and only allow this practice IF the client requests it in writing to avoid permissible purposes concerns, as well as not consistently doing for all applications, as it could be viewed as unfair otherwise. (pricing concerns for scoring changes is outside of this swimlane)

3. Additional borrower added after initial credit pull. I state yes we can charge for all because they requested the addition of the borrower.

4. Originator input error and new report needs generated. I state no we cannot charge the additional because it was our mistake.

5. Borrower input mistake from online application (we've seen this one a lot) and new report is ordered. I stated we could charge the client if we document it was an online application entry vs. originator entry.

These are all of course assuming procedures are followed and no exceptions have been made outside of what is outlined. (See, still in the rose colored glasses phase for a bit)

I apologize for the long post, but I just need to bounce this off someone to ensure I'm on the right page, and didn't overlook any other Reg that would apply a different direction. Much appreciated!

First, it is important to remember that fair lending is not always a black and white ordeal - it is a matter of risk. In answering these questions, you will need to evaluate your organization's overall fair lending risk and consider your risk tolerance level to make your decisions.

To me, most of your recommendations generally seem fine, but they don't necessarily eliminate all fair lending risk (which is what I call the conservative approach). Again, this isn't black and white and the conservative approach isn't a requirement per se, so there is probably more than one way to approach this. In fact, you may get differing opinions on this, based on who you talk to.

Now, specifically, here are my thoughts:

1) Your answer seems fine, but I also don't think that charging would generally be a problem if you are consistent and this policy doesn't disproportionately have a negative effect on a protected class.

2) This practice is probably fine and I would absolutely document evidence of the client's request. That said, I can see some fair lending risk if either 1) your lenders only steer certain classes of applicants toward this option or 2) this policy has a negative effect on a protected class. In other words, you may find that white males push back and request updated credit reports, but a protected class group (i.e. elderly, minority, women, etc.) don't request this. If the protected classes aren't aware of this - or if your lenders steer some applicants, but not all toward this option - then you might end up with disparate impact. If you wanted to eliminate all fair lending risk here, you wouldn't allow a new credit report to be pulled. I'm not saying that is necessary, it's just a matter of risk.

3) Again, this is probably fine if you are consistent. My main concern would be if disparate impact would be a risk to a protected class. Possibly not, but I can imagine married individuals always applying together initially, but non-married applicants starting out individually and adding someone later. If you want to eliminate all fair lending risk, you could just not charge for the late addition.

4) I agree.

5) My initial thought is that you might end up with more minority errors which could result in undue burden to a protected class. This might be fine to charge, but I would probably look at how many times this actually happens first. If not often, I would probably not charge for this so that potential fair lending risk is eliminated.

Again, this isn't black and white as these types of answers need to be considered in conjunction with your institution's risk profile, history of issues, and risk tolerance for fair lending.

Thank you so much for the time you took to reply. I appreciate your detail and sharing your thought process. There is definitely a lot of grey and that is my greatest concern with anything fair lending... so I planned to explain the level of risk with all of it and exposure concerns if there is lack of consistency.

They definitely have some risk to make decisions on.

Can you expound on the type of borrower input errors that would cause a report to be re-pulled? Are the errors such that you're pulling the wrong person's report?