Topic: Fair Credit Reporting Act (FCRA)
-
Should we be reporting loan information to credit bureaus regarding loan cosigners? I think we should, but a loan officer disagrees.
—
by
We are not aware of any regulatory requirements or prohibitions related to reporting loan information regarding cosigners to credit reporting agencies, other than the general requirement to report information that is accurate and complete. We think it is helpful to define “cosigner” — a term that can apply to different types of loan obligations as…
-
Does an adverse action notice need to be signed by a bank employee, and if so, must the employee have loan authority?
—
by
No, an adverse action notice does not need to be signed by a bank employee — whether the adverse action notice is being sent in accordance with the Equal Credit Opportunity Act (ECOA) and its implementing regulation (Regulation B) or the Fair Credit Reporting Act (FCRA). Regulation B requires that an adverse action notice contain…
-
As part of an internal review of our FCRA practices, we’re being asked if we have policies that address the requirements of 12 CFR 41 and whether the policies include: (a) consumer reporting, (b) consumer reporting disputes, (c) risk based pricing methodology, (d) identity theft prevention and red flags, (e) affiliate marketing, and (f) vendor oversight. Is there guidance that supports the need for procedures on all of these topics? We are also trying to determine if our bank has a marketing affiliate. Is a shared ownership interest required for entities to be affiliates?
—
by
Regulation V, which implements the Fair Credit Reporting Act (FCRA), generally requires banks to implement procedures covering the topics listed in your question. In 2011, the Dodd-Frank Act transferred certain rulemaking authority for the FCRA from the OCC to the CFPB. As a result, the OCC removed its FCRA regulations in 12 CFR 41, and…
-
Are joint (merged) credit reports allowed for joint consumer loans? For example, if two applicants have indicated their intent to jointly apply for credit, and each applicant’s income and assets will be used as a basis for our underwriting, may we obtain a joint credit report? If so, are there any privacy concerns regarding providing a joint report to two parties, and do different rules apply to married applicants? Also, Fannie Mae and Freddie Mac require “tri-merge” credit reports — does this pose any concerns?
—
by
Yes, you may obtain a merged credit report for co-applicants, in which vendors merge the information from two individuals’ credit reports — subject to the caveat that there may be some fair lending concerns if your vendor offers joint reports for married couples at a lower cost than separate credit reports for unmarried individuals. The…
-
Our bank is going to begin accepting applications for commercial and agricultural loans and working with a new document vendor. What disclosures and terms and conditions are required for commercial and agricultural loans?
—
by
While we cannot provide an exhaustive list of all necessary disclosures without knowing the details of the specific loans, we have highlighted some of the possibly applicable disclosure requirements below. Mortgage loans extended for primarily commercial or agricultural purposes are not subject to the TILA-RESPA Integrated Disclosure (TRID) requirements. However, certain disclosure requirements apply to…
-
A customer applied for credit, and we denied the application. The customer reapplied with a new co-applicant, and we denied the second application. Do we need to send a second denial letter to both the original applicant and the new co-applicant?
—
by
We believe you must send an adverse action notice to the original applicant, and if the denial was based in part on information in the co-applicant’s consumer report, to the co-applicant as well. The Equal Credit Opportunity Act (ECOA) and Regulation B adverse action requirements apply to the “applicant” for credit. When there are multiple…
-
We have an affiliate that will begin selling insurance products to our bank customers. We have changed our privacy notice to allow customers to opt-out of affiliate sharing. For mortgage loans, we will provide loan customers with the new privacy notice at the time of application. How soon may our insurance affiliate begin marketing to new our new mortgage loan customers? Does twenty days constitute a “reasonable opportunity” to opt out?
—
by
In general, we recommend that your institution should wait thirty days after providing the opt-out notice before sharing information about your customers with your insurance affiliate for marketing purposes; your bank arguably could start sharing customer information after just twenty days, as discussed below, but this would be at the risk of having to prove…
-
Our loan policy states that we may reuse credit bureau reports that are less than sixty days old. Are there any regulations that prohibit credit reports from being reused? Are there any issues with keeping this provision in our policy?
—
by
No, we are not aware of any regulations that prohibit a credit report from being reused for the purpose of reviewing a subsequent credit application, subject to the requirements below. As such, we believe your bank may continue to reuse credit reports less than sixty days old for the permissible purpose of credit underwriting. Of…
-
We have a customer with a home equity line of credit (HELOC) at our bank who believes that there has been fraudulent activity on his account. The customer said that a fraudulent check was drawn on the HELOC and paid to another bank. Do we have a permissible purpose to pull this customer’s credit report — without obtaining his permission — to determine if there has been any fraud on the account? Can we pull the credit report if the customer does grant permission?
—
by
Yes, we believe you have a permissible purpose under the Fair Credit Reporting Act (FCRA) to pull the customer’s credit report without his permission in this situation. You also may pull a credit report with the customer’s written permission. The FCRA permits a bank to obtain an individual’s credit report in limited circumstances, including for…