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#578963 - 07/05/06 01:18 PM File documentation - medical
Bartman Offline
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Bartman
Joined: Oct 2000
Posts: 1,191
Springfield
One-year business line of credit is up for renewal later this quarter. End of year profits were down & cash flow was tighter due to customer's battle with cancer and resulting time away from the business.

How should the lender document the file to explain the weaker-than-historic financials?
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Opinions are Bartman's, not those of my employer. "A noble spirit embiggens the smallest man."

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#578964 - 07/05/06 01:31 PM Re: File documentation - medical
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,277
This is not an issue for a business line of credit. Naturally, the files should be maintained securely but there is no prohibition on medical info for a commercial loan.
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Kathleen O. Blanchard, CRCM "Kaybee"
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#578965 - 08/29/06 03:59 PM Re: File documentation - medical
Bartman Offline
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Bartman
Joined: Oct 2000
Posts: 1,191
Springfield
KB - can you revisit this? The FDIC in Chicago held a FACT Act medical info conference call today, and they made it pretty clear that the rules apply regardless of type of credit.

In fact, they presented my original question word-for-word. (Thought it sounded familiar...kind of creepy.)
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Opinions are Bartman's, not those of my employer. "A noble spirit embiggens the smallest man."

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#578966 - 09/23/06 06:05 PM Re: File documentation - medical
Lucy Griffin Offline

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Lucy Griffin
Joined: Nov 2000
Posts: 1,544
While the FCRA and Regulation V specifically use the term "consumer" in the medical information rule, this should be interpreted in the context of the FCRA as a whole. The FTC has taken the position that when you use a consumer credit report for a business purpose loan, the consumer protections of the FCRA all apply to the consumer/business owner. Thus, the medical rule would be applicable even though the loan is business purpose.

Having said that, medical information must not be used except when it is relevant to the credit decision. In this situation you have information that would appear to be prohibited but is in fact affecting the borrower's performance. I think that in this isolated situation, you could consider the information to evaluate the risk but that, in doing so, you must keep the information confidential.

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