Retirement income vs employment income

Posted By: JoeG

Retirement income vs employment income - 03/02/21 11:34 PM

Would this underwriting practice be a violation?

Employed applicants approved for a car loan do not have to prove income if they have a FICO >=720.
Retired applicants approved for a car loan must always prove income, even if they have a FICO >=720.
Posted By: rlcarey

Re: Retirement income vs employment income - 03/02/21 11:41 PM

Define "retired". Sure sounds like age discrimination to me regardless. I am 22 and work at McDonald and say I make $30,000 a year and I get to skate, but if I am 65 and say I get $30,000 a year from social security and a pension I have to prove it?
Posted By: Dan Persfull

Re: Retirement income vs employment income - 03/03/21 01:49 PM

I also think you have an issue with the following since you are "evaluating" income differently.

3. Consideration of income.

i. A creditor need not consider income at all in evaluating creditworthiness. If a creditor does consider income, there are several acceptable methods, whether in a credit scoring or a judgmental system:

A. A creditor may score or take into account the total sum of all income stated by the applicant without taking steps to evaluate the income for reliability.

B. A creditor may evaluate each component of the applicant's income, and then score or take into account income determined to be reliable separately from other income; or the creditor may disregard that portion of income that is not reliable when it aggregates reliable income.

C. A creditor that does not evaluate all income components for reliability must treat as reliable any component of protected income that is not evaluated.

ii. In considering the separate components of an applicant's income, the creditor may not automatically discount or exclude from consideration any protected income. Any discounting or exclusion must be based on the applicant's actual circumstances.
Posted By: Rocky P

Re: Retirement income vs employment income - 03/03/21 05:56 PM

Considering that "retired" is (generally) 62 +, which falls under the definition of Elderly, I would worry about 1002.6(2)b iv
(iv) In any system of evaluating creditworthiness, a creditor may consider the age of an elderly applicant when such age is used to favor the elderly applicant in extending credit.

Then look just above it at the definition of the "Effects Test"1002.6 a (2)
Posted By: JoeG

Re: Retirement income vs employment income - 03/03/21 09:28 PM

Thanks everyone for your input! I couldn't agree more that this practice should not be used.