For loans that are non-consumer purpose mortgages, is it required to send the credit score disclosure?

So loans that are either: 1) business purpose secured by 1-4 family, or 2) any purpose not secured by 1-4 family.

(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 subsection referred to as the “lender”) shall provide the following to the consumer as soon as reasonably practicable:

So the score disclosure is only required on CONSUMER PURPOSE MORTGAGES, and nothing else.

Well, I think that someone needs to define what you are talking about - there is not just one disclosure that requires you to disclosure a score.

Let's say we have a loan application for either 1) business purpose secured by 1-4 family, or 2) any purpose not secured by 1-4 family. (so anything other than non-consumer purpose mortgage application)

Upon pulling a credit report, does FCRA require us to send a disclosure?

If you are risk-based pricing, yes. Also, at the time of an adverse action, if the credit report contains a score and was used in the decision making.

1) business purpose secured by 1-4 family, - No

2) any purpose not secured by 1-4 family - depends if you do Risk Based Pricing - https://www.bankersonline.com/regulations/12-1022-000

We don't do risk based pricing

Following up with Randy and Dan (and anyone else)...

Can you provide the regulatory citations that exempts business purpose credit?

We don't do Risk Based Pricing.

For a more specific loan application example: BUSINESS purpose credit application, individual borrower, secured by residential real estate (whether their home or rental property). Upon pulling a credit report, are their any FCRA credit score disclosures required (non-RBP)? Whether yes or no, can you cite the reg?

Thank you!

There are three disclosures that require a disclosure of one or more credit scores. 1) the NTHLA, a RBP or exception notice, or an adverse action notice.

Since you do not do RBP, Dan already gave you the citation above of the NTHLA.

Bringing this back up. To confirm, we do NOT do Risk Based Pricing.
I found this compliance cohort article and am a little confused.

https://www.compliancecohort.com/blog/risk-based-pricing-vs-credit-score-disclosure

Currently, we send out the H-3 letter (on consumer purpose loans secured by 1-4 family).

Are we required to send out the H-4 letter on non-mortgage secured loans?

If you do not do RBP then you would not be required to provide either the RBP disclosure or the exception disclosure.

Model form H-3 is an allowable substitute for providing the disclosures required by 609(g).

Color me jaded , but I must ask... awilli, are you 100% certain your shop is not doing risk based pricing?

Reg G 1022.70 Scope:

(a) Coverage. (1) In general. This subpart applies to any person, except for a person... 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.

Why are you even pulling a credit report? Is it only an approve / deny tool? Does everyone get exactly the same deal for the same product? One applicant with a stellar credit report is getting the exact same car loan terms as someone with a blemished and iffy credit history?

If so, then as the Gents above have already stated, the RBP rules do not apply to you, as the exception of 1022.74(a) applies. None of the Appendix H model forms would be applicable at all.

That leads to the next question: Are you using the credit report in a different way for mortgage loans? You must be, for the NHLA to apply. FCRA 609(g) requires creditors to give the NHLA if it "uses a consumer credit score" in connection with a residential real property loan. So, if you ARE using the credit score on THESE loan applications, then you do indeed need to give the NHLA, which is satisfied by Model form H-3 of Reg V. The other H-_ model forms remain inapplicable.

You certainly can have this difference in your shop, but your lending policy must be very well written to keep these lending criteria distinct and separate. Are your lenders sticking to it all. the. time.? If not, you not only have FCRA issues, but also fair lending.

Hence my questions to really re-evaluate what is going on.

We pull credit to confirm debt and credit worthiness and wherewithal in our analysis. Pricing and terms are not affected by the credit score or information obtained therein. We've obtained this confirmation and blessing from our internal Compliance and Fair Lending department as well. We do provide the NHLA and credit score notice to applicants for our consumer mortgage loans. Great questions and appreciate the additional insight.