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#288308 - 12/13/04 07:34 PM When pulling credit reports from all three CBAs...
jbs Offline
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Utah
The mortgage dept, through Loan Prospector, pulls reports from all three CBAs. Do we need to disclose the credit info from all three reports? If we only use info from one report, can we report only the credit info from that one report? Thanks.

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#288309 - 12/13/04 07:45 PM Re: When pulling credit reports from all three CBAs...
renniks Offline
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renniks
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New England
We are disclosing all three.

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#288310 - 12/13/04 08:52 PM Re: When pulling credit reports from all three CBAs...
corkygirl Offline
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middle of the country
We are also disclosing all three. I figure that since we have all three we need to disclose them, how would we ever prove we didn't "use" one of them?
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#288311 - 12/14/04 04:14 PM Re: When pulling credit reports from all three CBAs...
Truffle Royale Offline

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This has been discussed in a number of earlier threads in this forum.

The conclusion was that if you get 3 you disclose 3 because 1)it's the intention of FACTA that what you see, the applicant must see and 2)you'll be hard pressed convincing examiners that you didn't even glance at the information that was right in front of you.

ps Happy Birthday, corkygirl!

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#288312 - 12/15/04 08:23 PM Re: When pulling credit reports from all three CBAs...
Anonymous
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We use the "middle" score on our tri-merge reports.... as the one that is used in the credit decision process... and drop the other two. Therefore, I feel that we only need to report the middle score and its corresponding key factors.

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#288313 - 12/16/04 03:41 AM Re: When pulling credit reports from all three CBAs...
Kathleen O. Blanchard Offline

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I'm just posing this as a question for discussion - don't you "need" the other two scores to have one in the middle? The middle score could have been from any of the agencies; it depends upon what all 3 scores are - one will be in the middle. I would report all 3.
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#288314 - 12/16/04 03:22 PM Re: When pulling credit reports from all three CBAs...
Truffle Royale Offline

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Anon, check out the other threads on this subject, particularly this one.

The purpose of the FACT ACT is to provide the applicant with the same information you get that affects your credit decision. As Kaybee said, in a tri-merge, the other two scores affect the score you use because they make it the middle score.

But more importantly, not giving the applicant all the scores your receive deprives them of knowledge that could be adverse and/or erroneous. What made the lowest score the lowest? Is it identity fraud? How will your borrower know if you don't give them the scores?

Better yet, how are you going to explain this to the examiners?

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#288315 - 12/17/04 02:19 AM Re: When pulling credit reports from all three CBAs...
David Dickinson Offline
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Quote:

I'm just posing this as a question for discussion - don't you "need" the other two scores to have one in the middle? The middle score could have been from any of the agencies; it depends upon what all 3 scores are - one will be in the middle. I would report all 3.



This may be just grammatical, but I don't use the other two, although I might need them to determine the middle score.
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#288316 - 12/17/04 02:37 AM Re: When pulling credit reports from all three CBAs...
Kathleen O. Blanchard Offline

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I agree that it could be just grammatical, that you use the one in the "middle". In my experience, however, the lender generally looks at the other two, ponders differences, reviews the reports to see what caused the difference, etc.
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#288317 - 12/17/04 03:47 AM Re: When pulling credit reports from all three CBAs...
David Dickinson Offline
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But is that "using" the scores?
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#288318 - 12/17/04 04:01 AM Re: When pulling credit reports from all three CBAs...
Kathleen O. Blanchard Offline

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Probably not technically 100% but you get yourself closer and closer to not being able to defend not disclosing, especially if the lender "discussed" them in the file. In that kind of a situation, it might just be easier and safer to disclose.
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#288319 - 12/17/04 03:53 PM Re: When pulling credit reports from all three CBAs...
Truffle Royale Offline

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David,

I'm quoting you as the scource for my answer and now you seem to be vacilating on #35.

I agree with the numerous discussions on these threads that led to the concensus we should give all three. We use a tri-merge and our provider is giving us the notice and disclosure as part of their service to us. The dislosure shows all three of the cba scores, ranges and factors.

There is no way that I know of to block out the high and low scores and there's even less support for the notion that one would be able to convince their examiners they didn't even look at anything but the middle score. Most of all, I firmly believe that if you choose to disclose only the middle score you're ducking the true reason that FACTA exists...to inform the applicant.

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#288320 - 12/17/04 04:35 PM Re: When pulling credit reports from all three CBAs...
Anonymous
Unregistered

From the middle score only side of the argument, I don't think you have to "convince examiners you didn't even look at anything but the middle score." You'll be trying to convince them you didn't USE those other scores. Is looking at them USING them? That's the gray area.

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#288321 - 12/17/04 04:43 PM Re: When pulling credit reports from all three CBAs...
Ted Dreyer Offline
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The problem is that Congress didn't define what "using" means. In a sense you are only using the middle score, but in another sense you used the other two scores to determine which one to use.

In addition, this is similar to the issue of institutions saying they received a credit score but didn't use it in making their decision. You can say you didn't use the score, but how can you demonstate that to an examiner if it's in the file? By the same token, if you receive three scores how can you show what you did or didn't use?

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#288322 - 12/17/04 05:47 PM Re: When pulling credit reports from all three CBAs...
rainman Offline
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IMHO, if you "use" the middle score in connection with approval/denial/pricing the loan, then you are also "using" the other two even if you never look at them. The placement of the high and low scores are what make the middle one the one you use.
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#288323 - 12/21/04 03:50 PM Re: When pulling credit reports from all three CBAs...
Truffle Royale Offline

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Quote:

Most of all, I firmly believe that if you choose to disclose only the middle score you're ducking the true reason that FACTA exists...to inform the applicant.





This is the point that I think keeps getting pushed aside by the banking community.

FACTA wasn't created to make our lives miserable. It was done to help and protect the consumer, which, when you push away from your desk at the end of the day, you are too.

Look at it this way, if YOU applied for credit and the bank you went to got a tri-merge and they only told you the middle score, would you be happy? You've paid for that report. Why shouldn't you get ALL of the report the way the bank did? Would you believe them if they told you they "just looked at the middle score"?

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#288324 - 12/22/04 06:36 PM Re: When pulling credit reports from all three CBAs...
SJB Offline
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California
We don't actually use the scores but they come on the Loan Prospector generated reports so we were going to just disclose the middle score and the factors related to it. We just built a great PDF form with drop down menus for all the factors and it fits on one page. If we have to do all three (even though we don't use them) this has become a monster! Giving the consumer the page with the scores and the factors is even less enlightening but we may resort to that if disclosing all three is required.
This is like G-L-B privacy notices, good congressional intent but p-poor results!
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#288325 - 12/22/04 07:18 PM Re: When pulling credit reports from all three CBAs...
Truffle Royale Offline

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Scores can't be blocked on Loan Prospector?

Yes, it's more work and your PDF form may need to be changed. I stand by my opinion and that of the others on this and various threads. If you get 'em, you disclose 'em. If you don't want to disclose 'em, stop getting them!

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#288326 - 01/07/05 05:11 PM Re: When pulling credit reports from all three CBAs...
vlg Offline
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Quote:

We don't actually use the scores but they come on the Loan Prospector generated reports so we were going to just disclose the middle score and the factors related to it. We just built a great PDF form with drop down menus for all the factors and it fits on one page. If we have to do all three (even though we don't use them) this has become a monster! Giving the consumer the page with the scores and the factors is even less enlightening but we may resort to that if disclosing all three is required.
This is like G-L-B privacy notices, good congressional intent but p-poor results!




What if you made a section of your form into a chart? That way you could disclose three credit scores across the page without taking up too much space. That's what Bankers Systems did with their credit score disclosure form.

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#288327 - 01/07/05 08:22 PM Re: When pulling credit reports from all three CBAs...
MiMi Offline
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It is our understanding that disclosures are not required if the loan is approved through Loan Prospector? Based on this thread, that is not an accurate understanding on our part. Any input is appreciated.

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#288328 - 01/07/05 11:18 PM Re: When pulling credit reports from all three CBAs...
Suzie Offline
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Far North
MiMI -- Read 609 Disclosures to consumers. We use LP too and we disclose! Why do you beleive disclosure is not required?

In so far as the tri-merge report, we also obtain but disclose only the score we use, the middle score, and I'm vry comforatable with that.
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#288329 - 04/26/05 03:55 PM Re: When pulling credit reports from all three CBAs...
Anonymous
Unregistered

Has anyone asked a regulator for thier interpertation on this? If so please share.
Im getting the same argument for the tri-merge from the loan department and the definition of the word "use".
Im new at compliance, but i understand the point of the FACT ACT.
(g) DISCLOSURE OF CREDIT SCORES BY CERTAIN MORTGAGE LENDERS.—
‘‘(1) IN GENERAL.—Any person who makes or arranges loans
and who uses a consumer credit score, as defined in subsection
(f), in connection with an application initiated or sought by
a consumer for a closed end loan or the establishment of an
open end loan for a consumer purpose that is secured by 1
to 4 units of residential real property (hereafter in this sub
section referred to as the ‘lender’) shall provide the following
to the consumer as soon as reasonably practicable:
------this sections states uses a credit score in connection with an application, it does not say uses a credit score to price an application. If you do not have three credit scores, will the loan be approved for that program? if not, your using them.


in the notice to home loan applicant is reads--
‘NOTICE TO THE HOME LOAN APPLICANT
‘In connection with your application for a home loan, the lender must disclose to you the score that a consumer reporting agency distributed to users and the lender used in connection with your home loan, and the key factors affecting your credit scores.
-- it reads the lender must disclose to you the score that a consumer reporting agency distributed to users "and" the lender used in connection with your home loan, -- the scores distributed and the score the lender used.

if you not using the score (again the pricing may be based on the middle one), why do you need three? -- because Freddie Mac / or Fannie Mae require three scores for approval?

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#288330 - 04/26/05 04:09 PM Re: When pulling credit reports from all three CBAs...
Truffle Royale Offline

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You can pull whatever cb you like - single or tri-merge.

The bottom line from the multiple discussions on threads is that if you get a credit score you best disclose it because you'll have a hard time proving it didn't affect your decision.

Open for discussion still is whether, if you use a trimerge, you should disclose all three scores or just the middle one.

I suggest you search this forum, read as much as you can and make the decision you feel you can support and/or defend when the examiners show up at your door.

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#288331 - 04/28/05 08:22 PM Re: When pulling credit reports from all three CBAs...
Anonymous
Unregistered

thanks for the input. but the examiners have come and gone. this topic was never brought up. our current practice is using the middle score on a tri report....
i still dont agree with disclosing on the middle score, but am on the look out for additional information.

thanks

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#288332 - 04/28/05 08:30 PM Re: When pulling credit reports from all three CBAs...
complianceman Offline
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New Albany, IN
If you pull a trimerge report, you are actually pulling THREE DIFFERENT REPORTS. You MUST provide the customer with a disclosure for EACH credit score. As ANON posted on 4/26/05 at 11:55am, the regulation state, "Any person who makes or arranges loans and who uses A (which means ONE) consumer credit score..." It does not matter WHEN you pulled the credit or how you pulled the credit or who pulled the credit. Now if you are utilizing an automated underwriting system, you are not provided with the materials to disclsoure reason why the credit score is what is it.

The end result is this: If you pull someones credit report, whether it be a single, double or tri-merge, you should send a separate disclosure for each score. Because if I was Joe Applicant and you pulled a tri-merge but only provided me with a single credit score, I am going to find an attorney and sue because you did not fully disclose the information used to discern the rate and subsequest fees associated with the fees.

Watch, some attorney is setting in the wings just waiting to use this amendment to Regulation V as an affirmative defense to get Joe Applicant out of a foreclosre just like the Rodash case and Reg. Z many many years ago.

Save this and mark my word.
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