As I read that you report the terms that are set based on the credit report information. If the 48 month payment term is less favorable than a substantial proportion of your borrowers then it would be disclosed.

I think this is why (and we don't have to do the tracking to determine who gets the H-1) a lot of us have chosen to use the H-4 exception report.

Clear me up,please. We are planning to give the H-4 exception notice to all consumers, on whom we've pulled credit and booked a loan. My questions: 1)Timing, is at the time of consummation, "prior" to? Or does this need to be mailed out truly prior to closing? 2) I know we don't have to provide to those we provide an adverse action to, but what about those approved not accepted or withdrawn?

I had the same question - what about the applicants that are approved but not accepted?

Can we provide the notice at closing?

The rules imply the notice cannot be provided before the terms of the loan are set and it must be provided before consummation for closed-end credit. For open-end credit it must be provided before the consumer makes the first transaction.

We will most likely provide the disclosure at loan closing the same as we do other disclosures required at or before consummation.

For Consumer RE loans, we were thinking of providing the exception notice with all the other 3 day disclosures. All other consumer loans, at closing.

txbkr: If you're using an exception notice like the H-4, the timing for giving the notice is different than the timing for giving the H-1 standard notice.

222.74(e)(3) says that: "The notice described in paragraph (e)(1)(ii) of this section must be provided to the consumer as soon as reasonably practicable after the credit score has been obtained, but in any event at or before consummation in the case of closed-end credit or before the first transaction is made under an openend credit plan."

Received this from our SARMA (Transunion) rep today:

Starting November 19th 2010, all credit reports that your clients order from XpertOnline or any LOS interfaces into XpertOnline will include the Credit Score Disclosure Exception Notice (CSDEN). The CSDEN allows you to provide your clients with a compliance solution for the new FCRA requirements that are set to be in effect January 1st, 2011. No setup is required on your part; the CSDEN will be printed with any report that contains a credit score.

How does the CSDEN keep my customers compliant?
The CSDEN contains all the required information outlined in the new rules. More information about the regulations can be found here:
http://www.federalreserve.gov/reportforms/formsreview/RegV_20100115_ffr.pdf

What will it look like?
The CSDEN will print just after the score disclosure on the credit report. Please see the attached PDF (CSDEN11.08.10.pdf (79.00 KB)) to review the layout of the CSDEN.*

The CSDEN displays basic information about the CRA, the borrower, and if applicable, the co-borrower. It also contains all information required by the FCRA rules, such as a definition of what a credit score is, how it is used to determine credit terms, where a consumer can receive a copy of their report, and what a consumer should do if they feel there are mistakes on a report. The CSDEN also contains the actual credit scores, score factors, a graph displaying a range of scores, and within the graph which range the borrower falls into compared to the national average.

Is the CSDEN a substitute for a Risk-Based Pricing Notice?
Yes, the CSDEN can be delivered instead of a risk-based pricing notice and be considered compliant with the new regulations.

What are the advantages of the CSDEN over a Risk-Based Pricing Notice?
The CSDEN only needs to be printed with every report to ensure compliance. A risk-based pricing notice has varying factors determining whether or not it should be delivered. It will save time and money to simply print a CSDEN rather than determining whether or not a risk-based pricing notice should or should not be delivered, and will eliminate the risk of not sending a risk-based pricing notice and violating the regulations.

Would we provide the exception disclosure, as applicable, to guarantors? My initial answer is yes, if we pull their credit and it adversely impacts the rate. However, I can't find anything in the rule that addresses this topic. Thanks for any input.

On page 2731 of the Federral Register notice for Risk-based Pricing it says:

"Under the final rules, a person is required to provide notice only to consumers to whom it ‘‘grants, extends, or otherwise provides credit.’’ Except as discussed below, this generally refers to any consumer who applies and is approved for credit. A person does not grant, extend, or otherwise provide credit to a consumer who merely acts as a guarantor, co-signer, surety, or endorser for another consumer who applies and is approved for credit. As noted above, a guarantor, co-signer, surety, or endorser simply supports, and assumes liability for, credit granted, extended, or provided to a consumer, but does not itself receive a grant, extension, or other provision of credit."

I agree with Ted and the notices should not be provided to guarantors. Are there any other thoughts out there why they should be provided to guarantors?

Each day I get more confused on this:
We do not price our consumer loans based on anything other than term and product. Doesn't matter what you credit score is or what data is in you credit report you get wahtever rate we are offering at the time.
Do we need to provide the notice to our customers?
Also, we occasionally take a residential property as collateral on a business loan - these products are risk priced - since it is business purpose it is not covered - correct?

We do not price our consumer loans based on anything other than term and product. Doesn't matter what you credit score is or what data is in you credit report you get wahtever rate we are offering at the time.
Do we need to provide the notice to our customers?

No


Also, we occasionally take a residential property as collateral on a business loan - these products are risk priced - since it is business purpose it is not covered - correct?

Correct

Thanks The more I was reading through this tread the more nervous I was - thought I misreading the reg - which has happened several times lately!

I have now changed my thought process and agree that we don't provide the disclosure to guarantors. However, I am still wondering about the following scenario: pull credit on a guarantor, which adversely affects the rate. This would be a trigger for the disclosure to the borrower(s) correct? The rate was affected by the use of a credit report. But then, it's the score of the guarantor, and not of the borrower, so what goes on the disclosure? My head is spinning!!

I would think your borrower would already have a poor score and therefore required a guarantor? Most borrowers don't come in with a guarantor unless they have no credit or poor credit. Now you are making me think on this one. Wish they would just be clear on what they expect and quit making us think through every possible scenario and guess at what they mean.

Just got off the phone with Equifax and will NOT be providing the notice for loan not secured by real property. They did provide me with a graph and said I will need to create my own form.

Is there a letter we need to send with the exception notice or can we just send the notice by itself?

Read the thread (no poetry intended). I still don't see a response to the question on whether or not we need to give the notice to poeple who withdraw or who do not take the offer we provide. It looks like we would still have to give the notice...in my reading, but i want to make sure!

Are you using an exception or the risk based pricing notice?

" the use of a previously acquired credit report for a new credit request does not fit the permissible use requirements."

Where can I find this? I have looked in 15 USC 1681b but am not seeing this... Should I be looking somewhere else?

I don't know why this confuses me so much but it does. If someone could dumb this down for me i would appreciate it. I thought there was a form that you could give out to everyone and it would cover you? is that correct, if so which form is it B-1, B-2,..?

If you are delivering Model H-1, the disclosure must be delivered on closed-end credit before consummation of the transaction, but not earlier than the time the decision to approve an application is communicated to the consumer.

The disclosure must be delivered on an open-end credit plan, before the first transaction is made under the plan, but not earlier than the time the decision to approve an application is communicated to the consumer.

If there is no transaction, there is no delivery requirement.

"I don't know why this confuses me so much but it does. If someone could dumb this down for me i would appreciate it. I thought there was a form that you could give out to everyone and it would cover you? is that correct, if so which form is it B-1, B-2,..?"


It is B-1. On residential real estate transactions, you can either use B-3 or B-1 plus the Notice to Home Loan Applicant if you are getting credit scores.

One wonders why they state that we cannot deliver the exception notice before loan approval if they're going to get it anyway.

Ok, so if i give form B-1 out to everyone (plus the NTHLA for R/E secured) I will be covered. Thanks rlcarey.