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#288308 - 12/13/04 07:34 PM
When pulling credit reports from all three CBAs...
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New Poster
Joined: Dec 2004
Posts: 24
Utah
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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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#288310 - 12/13/04 08:52 PM
Re: When pulling credit reports from all three CBAs...
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Power Poster
Joined: Sep 2004
Posts: 4,241
middle of the country
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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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#288312 - 12/15/04 08:23 PM
Re: When pulling credit reports from all three CBAs...
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Anonymous
Unregistered
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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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#288314 - 12/16/04 03:22 PM
Re: When pulling credit reports from all three CBAs...
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10K Club
Joined: Jul 2003
Posts: 17,398
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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...
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10K Club
Joined: Nov 2000
Posts: 18,762
Central City, NE
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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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#288320 - 12/17/04 04:35 PM
Re: When pulling credit reports from all three CBAs...
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Anonymous
Unregistered
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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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#288322 - 12/17/04 05:47 PM
Re: When pulling credit reports from all three CBAs...
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Power Poster
Joined: Nov 2004
Posts: 3,238
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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...
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10K Club
Joined: Jul 2003
Posts: 17,398
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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...
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Diamond Poster
Joined: Jun 2002
Posts: 1,210
California
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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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#288326 - 01/07/05 05:11 PM
Re: When pulling credit reports from all three CBAs...
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Member
Joined: May 2003
Posts: 74
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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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#288328 - 01/07/05 11:18 PM
Re: When pulling credit reports from all three CBAs...
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Platinum Poster
Joined: Apr 2002
Posts: 662
Far North
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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...
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Anonymous
Unregistered
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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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#288331 - 04/28/05 08:22 PM
Re: When pulling credit reports from all three CBAs...
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Anonymous
Unregistered
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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...
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Platinum Poster
Joined: Mar 2005
Posts: 687
New Albany, IN
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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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