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#2254015 - 05/17/21 04:44 PM withdrawn before end of 3 day TRID requirement
anio1424 Offline
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Question about withdrawn loans. When a borrower withdraws before the 3 day requirement is up for initial disclosures, do we still have to send the credit report disclosure? I know we don't need to send the LE and other disclosures, but am wondering about this one because we have pulled a credit report.

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#2254030 - 05/18/21 12:57 PM Re: withdrawn before end of 3 day TRID requirement anio1424
Adam Witmer Offline
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Great question. The answer is a bit complex, but the short answer is this: if the loan is for a consumer purpose that is secured by 1 to 4 units of residential real estate, 609(g) still requires disclosures.

Also, keep in mind that 1002.14(a)(2) of Reg B still requires an appraisal disclosure, even if you don't need to send an LE because you denied the loan within 3 days.
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#2254265 - 05/24/21 03:02 PM Re: withdrawn before end of 3 day TRID requirement anio1424
Compliance NABW Offline
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Yes, the Notice to Home Loan Applicant is still necessary in the scenario Adam mentioned; therefore, many institutions just use the Credit Score Exception Disclosure upfront for all applications. However, my understanding is that it would not technically be necessary in the scenario you mentioned.

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#2254275 - 05/24/21 04:04 PM Re: withdrawn before end of 3 day TRID requirement anio1424
rlcarey Online
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There is no provision not to send a RBP Exception Notice (1022.74) on a withdrawn application.
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#2254305 - 05/24/21 08:47 PM Re: withdrawn before end of 3 day TRID requirement anio1424
Compliance NABW Offline
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When does (2) get fulfilled in the scenario presented above?

(a) In general. Except as otherwise provided in this subpart, a person must provide to a consumer a notice (“risk-based pricing notice”) in the form and manner required by this subpart if the person both:

(1) Uses a consumer report in connection with an application for, or a grant, extension, or other provision of, credit to that consumer that is primarily for personal, family, or household purposes; and

(2) Based in whole or in part on the consumer report, grants, extends, or otherwise provides credit to that 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.

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#2254306 - 05/24/21 08:48 PM Re: withdrawn before end of 3 day TRID requirement anio1424
Compliance NABW Offline
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If the requirement to provide a RBPN is not established, then how is the need to provide a 1022.74 notice established?

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#2254309 - 05/24/21 08:55 PM Re: withdrawn before end of 3 day TRID requirement anio1424
rlcarey Online
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If you are delivering actual Risk Based Pricing Notices, then under 1022.73(c), you cannot deliver one before the decision to grant credit is made. I know if no creditors that use an actual risk based pricing notice.

If you are delivering a Risk Based Pricing Exception Notice under 1022.74, then you have to meet the timing requirements under the FCRA 609(g), under which there are no delivery exceptions for withdrawn or denied loans.
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#2254313 - 05/24/21 09:33 PM Re: withdrawn before end of 3 day TRID requirement anio1424
Compliance NABW Offline
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Yes, creditors do not generally use an actual RBPN. But, providing the Exception Notice is dependent on having to provide the RBPN. My argument here is that as no RBPN is necessary, then no Exception Disclosure would be necessary either. However, 609(g) applies as long as a credit score is used and the application is for 1-4 family residential real property. So, I do revise my initial statement and agree with Adam that if 1-4 family is involved, then you have to give the information that is required by 609(g).

[(d) Loans secured by residential real property—credit score disclosure—(1) In general. A person is not required to provide a risk-based pricing notice to a consumer under §1022.72(a) or (c) if . . .

e) Other extensions of credit—credit score disclosure—(1) In general. A person is not required to provide a risk-based pricing notice to a consumer under §1022.72(a) or (c) if: . . . ]

So, you can read these two citations as "An RBPN is not required to be provided to the consumer if the creditor provides a H-3 or H-4 or H-5." Since the RBPN is not necessary due to not meeting the standards of 1022.72(a)(2), the Credit Score Exception Disclosure is not necessary either. This is because the Credit Score Exception Disclosure is dependent on having to provide the RBPN.

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#2254314 - 05/24/21 09:35 PM Re: withdrawn before end of 3 day TRID requirement anio1424
Compliance NABW Offline
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It's like if a bank did not engage in risk-based pricing at all. Would you say a 1022.74 notice is still required?

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#2254316 - 05/24/21 10:00 PM Re: withdrawn before end of 3 day TRID requirement anio1424
rlcarey Online
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If you are not varying your pricing based on information contained in the the credit report, then none of Subpart H of Regulation V would apply per 1022.70(a)(1)(ii):

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.
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#2254328 - 05/25/21 12:32 PM Re: withdrawn before end of 3 day TRID requirement rlcarey
Adam Witmer Offline
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Originally Posted by rlcarey
There is no provision not to send a RBP Exception Notice (1022.74) on a withdrawn application.

Oh good grief. My mind read this question as whether the disclosure was required after a loan was DENIED within the first 3 days. The provision to not send a RBP Exception notice applies when you send an Adverse Action notice - see 1022.74(b) - which is obviously not the case on a withdrawn application. And of course, the 609(g) disclosure is still required too.

So my initial response should have been this - Yes, credit score disclosures are still required for WITHDRAWN applications.
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All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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#2254330 - 05/25/21 01:08 PM Re: withdrawn before end of 3 day TRID requirement anio1424
Compliance NABW Offline
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Yes, RL. Exactly my point. So, with a withdrawn application in such a short time (assuming no pricing took place), I fail to see how it meets the scope of 1022.72, which is what triggers 1022.74.

[(2) Based in whole or in part on the consumer report, grants, extends, or otherwise provides credit to THAT 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.]

THAT consumer was not granted, extended, or otherwise provided credit contingent on risk-based pricing.

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#2254341 - 05/25/21 01:57 PM Re: withdrawn before end of 3 day TRID requirement anio1424
rlcarey Online
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You are missing the point of the exception notice. If you are risk base pricing your mortgage loans, you give everyone the exception notice if you are not using risk based pricing notices.

The timing of the delivery has to match 609(g) which has no provisions to not deliver the exception notice to applications that are denied or withdrawn.

(d) Loans secured by residential real property—credit score disclosure. (1) In general. A person is not required to provide a risk-based pricing notice to a consumer under §1022.72(a) or (c) if:

(i) The consumer requests from the person an extension of credit that is or will be secured by one to four units of residential real property; and

(ii) The person provides to each consumer described in paragraph (d)(1)(i) of this section a notice that contains the following:


(3) Timing. The notice described in paragraph (d)(1)(ii) of this section must be provided to the consumer at the time the disclosure required by section 609(g) of the FCRA is provided to the consumer, but in any event at or before consummation in the case of closed-end credit or before the first transaction is made under an open-end credit plan.


Also, under 1022.74(b), you do not have to deliver a risk based pricing notice if the application is denied, but that does not cover the exception notice which is under 1022.74(d).

(b) Adverse action notice. A person is not required to provide a risk-based pricing notice to the consumer under §1022.72(a), (c), or (d) if the person provides an adverse action notice to the consumer under section 615(a) of the FCRA.
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#2254428 - 05/26/21 02:02 PM Re: withdrawn before end of 3 day TRID requirement anio1424
Compliance NABW Offline
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I don't think I am missing the point, but I already agree in substance on mortgage loans. Lets change the topic to auto loans. Same scenario as the OP but it is for a car loan. Is a 1022.74 notice required? If so, why? What can you hang your hat on other than 609(g)?
Last edited by Compliance NABW; 05/26/21 02:03 PM.
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#2254434 - 05/26/21 02:28 PM Re: withdrawn before end of 3 day TRID requirement anio1424
rlcarey Online
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rlcarey
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Still no exception for withdrawn or denied applications in 1022.74(e), which would apply to an auto loan if you are using an exception notice:

1022.74(e)(3) Timing. The notice described in paragraph (e)(1)(ii) of this section must be provided to the consumer as soon as reasonably practicable after the credit score has been obtained, but in any event at or before consummation in the case of closed-end credit or before the first transaction is made under an open-end credit plan.

Same thing in 1022.74(f) for when a credit score is not available.
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#2254454 - 05/26/21 05:53 PM Re: withdrawn before end of 3 day TRID requirement anio1424
Compliance NABW Offline
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But, again, 1022.74 doesn't apply. We keep having a circular argument. How does it apply when the requirement for an RBPN doesn't apply. It's the same thing as if a creditor didn't use risk based pricing at all. What triggers the need for the Exception Notice?

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#2254463 - 05/26/21 09:21 PM Re: withdrawn before end of 3 day TRID requirement anio1424
rainman Offline
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The exception notice (1022.74) is different than the RBP notice (1022.72 & 1022.73).

The basic rule (1022.72 and 73) is that you have to provide the RBP notice to borrowers that get loans on materially less favorable terms than those available to a substantial proportion of your borrowers. To figure out which borrowers get the notice, you can use the credit score proxy method or the tiered pricing method. This approach means that some borrowers get the notice and others don't. It requires you to have a method for determining who gets the notice, and training for staff so they know who gets the notice. The notice tells the borrower that they have in fact received a rate less favorable than is available to other borrowers.

The exception notice (1022.74) provides an alternative way to satisfy the risk based pricing notice requirement that avoids the staff training and procedures for giving the notice to some but not all borrowers. 1022.74 says that you don't have to provide the RBP notice to affected borrowers if, instead, you provide the exception notice to everyone that applies. The exception notice says that the lender uses credit scores to establish loan pricing, so if your score is lower you may not get the best pricing. But if you don't provide the exception notice to all applicants, then you haven't triggered the exception to the RBP notice requirement and you woul still have to give that notice.
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#2254468 - 05/26/21 10:00 PM Re: withdrawn before end of 3 day TRID requirement anio1424
rlcarey Online
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Rainman is correct.

If you risk base price your loans, you:

1. Determine who is not getting preferred pricing and deliver a RBP notice to those customers that are approved at a lower level - a real pain in the arse and not worth the trouble or training.

or

2. You give everyone the exception notice.
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#2254957 - 06/07/21 07:19 PM Re: withdrawn before end of 3 day TRID requirement anio1424
Compliance NABW Offline
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That is not how I interpret it, but, thank you all for the discussion.

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#2254961 - 06/07/21 07:27 PM Re: withdrawn before end of 3 day TRID requirement anio1424
rlcarey Online
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That is fine, but you never gave a citation that supports your interpretation.
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#2254976 - 06/07/21 08:59 PM Re: withdrawn before end of 3 day TRID requirement anio1424
Dan Persfull Online
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From 1022.74

(e) Other extensions of credit—credit score disclosure. (1) In general. A person is not required to provide a risk-based pricing notice to a consumer under §1022.72(a) or (c) if:

(i) The consumer requests from the person an extension of credit other than credit that is or will be secured by one to four units of residential real property; and

(ii) The person provides to each consumer described in paragraph (e)(1)(i) of this section a notice that contains the following:
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#2254978 - 06/07/21 10:33 PM Re: withdrawn before end of 3 day TRID requirement anio1424
rlcarey Online
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Dan - I am not sure what side of the fence that is supposed to support smile
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#2254991 - 06/08/21 02:57 PM Re: withdrawn before end of 3 day TRID requirement anio1424
rainman Offline
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I think Dan was highlighting the wording that supports what you and I said.
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#2255029 - 06/08/21 08:58 PM Re: withdrawn before end of 3 day TRID requirement anio1424
Dan Persfull Online
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Rainman is correct. I agree with you and him there is no exception in the regulation not to provide the Exception Notice in 1022.74(e) for a withdrawn application.

If you provide the exception notice instead of the RBPN then you must provide it to each consumer applying for credit other than credit secured by 1-4 residential real property. In that case you provide the H-3 exception notice or the 609(g) notice.

In short if you use the exception notice then all applicants either gets the exception notice for non residential loans or gets the H-3 exception notice or the 609(g) notices for 1-4 residential real property loans.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2255336 - 06/15/21 06:10 PM Re: withdrawn before end of 3 day TRID requirement anio1424
Compliance NABW Offline
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Again, my support is the Exception Notice is contingent on a RBPN being necessary. If an RBPN is not necessary, then why would the Exception Disclosure be necessary. Nothing any of you said has shown me otherwise. You all just keep focusing on the Exception Disclosure being used instead of the RBPN. But, the Exception Disclosure is not a required disclosure in and of itself.

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