Topic: Fair Credit Reporting Act (FCRA)
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When an individual personally guarantees a commercial loan, we require written authorization to pull credit information. Does that authorization expire after a set number of days? Or can we pull a credit report months after receiving written authorization?
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We are not aware of a statutory or regulatory expiration date on a consumer’s written authorization to allow your bank to obtain a credit report. However, in order to clarify the authorization, you may wish to add a provision specifying a certain time period during which you may pull a credit report in connection with…
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We purchased a bank and acquired all of their loans. Do we need to include the name of that bank when we report our newly acquired loans to our credit bureau?
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No, we do not believe you need to include the acquired bank’s name when furnishing information to your credit bureaus. In the context of mergers and acquisitions, Regulation V requires furnishers of consumer credit reporting information to establish policies that prevent re-aging, duplicative reporting, or other problems that may similarly affect the accuracy or integrity…
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A customer applied jointly for a HELOC with a co-signer, and we pulled both co-signers’ individual credit reports. However, after underwriting the loan, we found that the co-signer’s credit caused the loan to be rejected. If the customer reapplies for a HELOC individually, can we reuse her credit report, which we first pulled in connection with the joint application?
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Yes, the Fair Credit Reporting Act (FCRA) permits a lender to reuse a credit report for the purpose of reviewing a subsequent credit application (which is a “permissible purpose” under the FCRA). Before reusing the report, however, you should check your bank’s underwriting policies and procedures, which should indicate when a credit report is too…
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Our bank shares nonpublic personal information with nonaffiliated financial companies pursuant to a joint marketing agreement and also reports credit information to a credit bureau. Our privacy policy has not changed for three years. What are our privacy notice obligations under the Gramm-Leach-Bliley Act (GLBA)?
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You must provide initial privacy policy disclosures, including that you share customer information with nonaffiliated third parties pursuant to a joint marketing agreement. However, you are exempt from GLBA’s annual privacy notice requirement, subject to the discussion below. The GLBA requires financial institutions to provide initial privacy policy disclosures to new customers and re-disclose their…
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We closed on a mortgage loan refinancing on July 1, and the borrower asked us to lower the interest rate on July 5. We refused, and the borrower is threatening to rescind the transaction on the last day of the right of rescission period — July 6. If the borrower reapplies for the refinancing after rescinding, can we reject the customer’s application?
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Yes, we believe that you may reject the customer’s application, which will require you to provide an appropriate adverse action notice. Regulation B does not prohibit a creditor from rejecting an applicant due to the applicant’s previous exercise of the right of rescission. Regulation B permits creditors to consider “any information obtained” in connection with…
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We are preparing to change our privacy notice from not sharing with an affiliate to sharing with an affiliate. We would like to accept opt-outs only through a reply form. Can we put “N/A” in lieu of providing our telephone number and web address? Can you verify that Illinois law does not require an opt-out period of more than 30 days from sending the notice? Does Illinois law exempt commonly-owned affiliates from the opt-in requirement? Does federal law exempt information that is not about creditworthiness from opt-out requirement?
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Yes, we believe that you may enter “N/A” in lieu of providing a telephone number or internet website for opt-out purposes, since you are providing a reply form as a reasonable means for a customer to exercise the opt-out right. If you are comfortable with modifying the model forms, which is permitted under Regulation P,…
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We don’t report commercial loans to the credit bureau. If you have a D/B/A installment loan made to a sole proprietor for consumer purposes, is it reportable to the credit bureau?
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We are not aware of any laws or regulations that require a creditor to report any loan information to a credit reporting agency. However, if your bank’s policies call for making such reports in connection with consumer credit (which is likely), we recommend focusing on the purpose of a loan made to a sole proprietor.…
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Are we required to send adverse action notices to all joint applications, or just to the primary applicant? We pull credit reports on all credit applicants.
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You should provide all of the applicants with adverse action notices, even if they had applied jointly with other applicants, because you have pulled credit reports on all of them. As explained in a helpful Federal Trade Commission (FTC) advisory opinion, while Regulation B requires that you send an adverse action notice to only the…
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If we only share customer information with our affiliates as permitted by the FCRA, will we qualify for the new exception to the annual privacy notice requirement? And when does it go into effect?
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The amendment to the annual privacy notice requirement went into effect on the date of the bill’s signing, December 4, 2015. However, if you are sharing information with affiliates under the Fair Credit Reporting Act (FCRA), we recommend going forward with this year’s annual privacy notice mailing — unless you hear otherwise from your primary…
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One of our customers is submitting repeated disputes about information on a credit report. We responded as required and confirmed that the information is accurate. Do we need to continue responding? Should we provide a “Notice of Termination of Customer Dispute” form?
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No, you are not required to continue investigating and responding to the disputes. If you can demonstrate that the disputes are “frivolous or irrelevant,” or that they originate from a credit repair organization, the Fair Credit Reporting Act (FCRA) and Regulation V exempt you from investigating the disputes. And yes, you should provide notice when…