Thread Options 
|
#1454426 - 10/13/10 01:12 PM
Re: Risk-based pricing (FACTA 1/1/11)
J2C
|
Diamond Poster
Joined: May 2004
Posts: 1,475
Big Brother knows and that's a...
|
And, what if our direct auto loan rates are different from our indirect loan rates but same terms? Maybe I am looking into this too deep.
_________________________
My opinion is mine only- not my employer's!
|
|
Return to Top
|
|
|
|
|
#1455910 - 10/15/10 08:15 PM
Re: Risk-based pricing (FACTA 1/1/11)
cloudy
|
Gold Star
Joined: Aug 2008
Posts: 455
|
If the insitution pulls out a credit report and a rate guideline is used depending on the credit score to determine the rate of the loan, will the risk based pricing notice need to be given out?
|
|
Return to Top
|
|
|
|
|
#1455931 - 10/15/10 08:30 PM
Re: Risk-based pricing (FACTA 1/1/11)
newyork
|
10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
|
yes
_________________________
My opinion only. Not legal advice.
Say you'll haunt me - Stone Sour
|
|
Return to Top
|
|
|
|
|
#1456516 - 10/18/10 08:55 PM
Re: Risk-based pricing (FACTA 1/1/11)
RR Joker
|
100 Club
Joined: Dec 2009
Posts: 184
TX
|
We do not use credit scores and we use a rate sheet as a guideline. After reviewing our audits, we are following the rate sheet 90% of the time.
We have the following statement on our guideline:
These rates are guidelines only. Officer discretion may be used in setting loan rates. Factors to consider are the LTV, credit history, character, compensating accounts with our bank, banking relationship, stability of employment or competing rates.
I think this statement shows that we are using RBP even though we do not use credit scores. Any thoughts?
_________________________
My employer doesn't agree with anything I say.
|
|
Return to Top
|
|
|
|
|
#1456839 - 10/19/10 05:07 PM
Re: Risk-based pricing (FACTA 1/1/11)
Sewanee, CRCM
|
Power Poster
Joined: Jan 2008
Posts: 6,389
Looking for My Happy Place....
|
It was pointed out on another thread that section 1100F of the Dodd-Frank Bill will require all declined applicants to receive a notice effective July 2011 (transfer date)the requirement to provide a notice to declined customers will be expanded. Wait... does this mean that banks that don't use credit scores will just have to use them anyway? Never mind - got my answer! Thanks!
_________________________
What would you do if you knew you could not fail? ~ Dr. R Schuller
My opinion only.
|
|
Return to Top
|
|
|
|
|
#1457448 - 10/20/10 06:05 PM
Re: Risk-based pricing (FACTA 1/1/11)
Tigg
|
Power Poster
Joined: Oct 2009
Posts: 9,250
OK
|
Do the risk-based pricing rules go in effect on 1-1-11 or for applications received on or after 1-1-11?
_________________________
I'm fixin' to fix that.
|
|
Return to Top
|
|
|
|
|
#1457484 - 10/20/10 06:30 PM
Re: Risk-based pricing (FACTA 1/1/11)
raitchjay
|
10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
|
I don't see where it specifically states it, but that would make sense and follow other regulatory changes (applications taken on or after)
_________________________
My opinion only. Not legal advice.
Say you'll haunt me - Stone Sour
|
|
Return to Top
|
|
|
|
|
#1457490 - 10/20/10 06:33 PM
Re: Risk-based pricing (FACTA 1/1/11)
RR Joker
|
Power Poster
Joined: Oct 2009
Posts: 9,250
OK
|
Yeah...the more i think on it, the more sense that makes. Take an app. in December, give the old ETIL, loan closes in January....you wouldn't have to give the new version of the final TIL it wouldn't seem. But maybe this is all a moot point...i would think our LOS would be updated in December (you'd think), which would mean we would beat the deadline anyway. No harm in giving the new stuff early i wouldn't think.
_________________________
I'm fixin' to fix that.
|
|
Return to Top
|
|
|
|
|
#1457571 - 10/20/10 07:54 PM
Re: Risk-based pricing (FACTA 1/1/11)
Here4Life
|
100 Club
Joined: Jul 2009
Posts: 187
|
Where do you see the notices on Equifax's site?
|
|
Return to Top
|
|
|
|
|
#1457642 - 10/20/10 09:03 PM
Re: Risk-based pricing (FACTA 1/1/11)
rockchalk02
|
100 Club
Joined: Feb 2010
Posts: 122
|
Under Ancillary Services, but I'm not sure which ones to use. I'm have been playing phone tag with the Technical Client Service for a week. If you figure anything out, please let me know.
|
|
Return to Top
|
|
|
|
|
#1457841 - 10/21/10 02:31 PM
Re: Risk-based pricing (FACTA 1/1/11)
ccman
|
Power Poster
Joined: Oct 2009
Posts: 9,250
OK
|
I believe you would provide the NTHLA and AAN as normal. The RBPN would be provided to borrowers who were approved, at least until we are told otherwise. If the disclosure is being provided by the credit bureau, wouldn't it be going out to customers who are eventually denied as well? The credit bureau isn't going to know who we deny and who we approve, so ......is it a problem for an applicant who gets denied to have received it anyway?
_________________________
I'm fixin' to fix that.
|
|
Return to Top
|
|
|
|
|
#1458105 - 10/21/10 06:56 PM
Re: Risk-based pricing (FACTA 1/1/11)
Tigg
|
New Poster
Joined: Oct 2006
Posts: 14
GA
|
Is anyone who is looking at using the risk based pricing notice (not the credit score disclosure exception) comfortable that they understand how the provisons in Dodd Frank may affect this?
We were planning to use the risk based pricing notice because it is a fairly static document, but it appears the rules under Dodd Frank are going to require that this disclosure include a lot of consumer specific info including credit score, the range of possible credit scores under the model used, up to four of the key factors that adversely affected the credit score of the consumer in the model used, the date on which the credit score was created; and the name of the person or entity that provided the credit score.
Am I reading this right?
|
|
Return to Top
|
|
|
|
|
#1458295 - 10/21/10 11:18 PM
Re: Risk-based pricing (FACTA 1/1/11)
Ted Dreyer
|
New Poster
Joined: Oct 2006
Posts: 14
GA
|
|
|
Return to Top
|
|
|
|
|
#1458382 - 10/22/10 02:08 PM
Re: Risk-based pricing (FACTA 1/1/11)
ahou
|
Gold Star
Joined: Nov 2004
Posts: 313
|
For increases in the APR due to account reviews, a seminar speaker said you can't use the exception notice. Has anyone else heard this?
Found the answer in the preamble.
The Agencies do not believe that the reasons for permitting exception notices in lieu of risk-based pricing notices apply in the case of account review notices. Ahou, I rememeber the same information from my research. Could you clarify your position and help me verify - my take is that we will need to provide an alternate RBPN in this situation, but we plan to utilize the exception notice for all other instances. Is this your take as well? Which notice are you thinking of using?? PM me if that's easier - I appreciate your input!
|
|
Return to Top
|
|
|
|
|
#1458521 - 10/22/10 04:20 PM
Re: Risk-based pricing (FACTA 1/1/11)
jross
|
Power Poster
Joined: Oct 2009
Posts: 3,927
|
We also do not pull or use credit scores nor do we use a standard rate sheet (yet). However, our loan officers do adjust the pricing based on information from the credit report.
I'm presuming that we then do have to issue a disclosure. I think it would be the H-1 notice (H3-H5 pertain to credit score and H2 is only used for reviews).
What I'm having a tough time deciding is WHEN (under what circumstances) we need to issue the disclosure, given that we don't have a standard pricing/rate sheet?
Any thoughts?
_________________________
I hear and I forget. I see and I remember. I do and I understand.--Confucius
|
|
Return to Top
|
|
|
|
|
#1458571 - 10/22/10 05:21 PM
Re: Risk-based pricing (FACTA 1/1/11)
Doug Hendrickson
|
Power Poster
Joined: Mar 2001
Posts: 3,920
OK
|
You must provide to a consumer a risk-based pricing notice if you
1. Use a consumer report in connection with an application for, or a grant, extension, or other provision of, credit to that consumer that is primarily for personal, family, or household purposes: AND
2. Based in whole or in part on the consumer report, grants, extends, or otherwise provides credit to that consumer on material terms that are materially less favorable than the most favorable material terms available to a substantial proportion of consumers from or though that person.
To determine if the terms are materially less favorable you can use either
a. Direct comparision method;
b. Credit score proxy method; or
c. Tiered pricing method.
|
|
Return to Top
|
|
|
|
#1459101 - 10/25/10 06:24 PM
Re: Risk-based pricing (FACTA 1/1/11)
Queen Mum
|
Platinum Poster
Joined: Jul 2001
Posts: 708
|
Our Mortgage Lending Dept. utilizes risk based pricing. They will be providing the exception notice obtained from our Credit Reporting Bureau.
Our Consumer Lending Dept. does not utilize risk based pricing. We have 1 single APR for each product. All consumer customers with a score above a certain score threshold receive the same APR. Other factors may influence the credit decision but do not affect the APR. We believe we do not need to provide any type of notice to these customers unless the loan is a Home Equity Product. For those customers,we will continue to provide the Notice to Home Loan Applicant disclosure.
We have a few questions.
1) Do we have to provide the exception notice to all applicants regardless of the line of business or can we provide only to our Mortgage Loan customers?
3) Do you agree that for our consumer products the RBPN rules are not applicable? I have the same question. Bump please?
_________________________
CRCM CAMs
|
|
Return to Top
|
|
|
|
|
#1459181 - 10/25/10 07:41 PM
Re: Risk-based pricing (FACTA 1/1/11)
Comply 101
|
Power Poster
Joined: Oct 2009
Posts: 3,927
|
1. The regulation notes that factors relevant to determining the signaficance of a difference in the cost of credit include the type of credit product and the term of the credit extension. Therefore I think it could be argued that you do not have to provide the exception notice to all applicants, but can instead base it on type of credit and term (e.g., use risk based pricing for only certain products/terms). 2. I'll defer to more enlightened heads on the consumer products question. If you have 1 single APR for each product and ALL consumer customers over a certain score get that APR and all others are denied, I'd say you're okay (except possibly for other fair lending issues). See Disparate
_________________________
I hear and I forget. I see and I remember. I do and I understand.--Confucius
|
|
Return to Top
|
|
|
|
|
#1459288 - 10/25/10 09:37 PM
Re: Risk-based pricing (FACTA 1/1/11)
J2C
|
Junior Member
Joined: Dec 2003
Posts: 25
Alabama
|
Okay. I'm finally getting the loan officers involved and, of course, none of us understand the tiers. Can someone who is using the tier rate method give me an example of how you have your tiers set up? My bank president is talking about using different tiers for different types of loans and my head is beginning to spin! Thanks in advance!
_________________________
I went to an office and was respected as a human being and my opinion was appreciated. Guess what? I was in the wrong office!
|
|
Return to Top
|
|
|
|
|
#1459340 - 10/26/10 12:16 PM
Re: Risk-based pricing (FACTA 1/1/11)
cindylou66
|
Power Poster
Joined: Apr 2005
Posts: 3,663
TN
|
Okay. I'm finally getting the loan officers involved and, of course, none of us understand the tiers. Can someone who is using the tier rate method give me an example of how you have your tiers set up? My bank president is talking about using different tiers for different types of loans and my head is beginning to spin! Thanks in advance! Are you trying to create a new tiered pricing system or do you already have one in place? If creating a new one, I may be able to help you. PM me.
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.
|
|
Return to Top
|
|
|
|
|
#1459433 - 10/26/10 02:16 PM
Re: Risk-based pricing (FACTA 1/1/11)
Dani York, CRCM
|
Power Poster
Joined: Oct 2009
Posts: 3,927
|
I'm also interested in the tiering examples. we currently don't have one in place, but apparently are going to need it to address this regulation (we don't pull or use credit scores).
_________________________
I hear and I forget. I see and I remember. I do and I understand.--Confucius
|
|
Return to Top
|
|
|
|
|
#1459554 - 10/26/10 04:13 PM
Re: Risk-based pricing (FACTA 1/1/11)
Doug Hendrickson
|
Power Poster
Joined: Apr 2005
Posts: 3,663
TN
|
Doug, I can't send you my pricing matrix, but I did pm you a summary of the process we used to create it.
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.
|
|
Return to Top
|
|
|
|
|
#1459659 - 10/26/10 06:14 PM
Re: Risk-based pricing (FACTA 1/1/11)
Doug Hendrickson
|
New Poster
Joined: Aug 2008
Posts: 5
|
We do not pull credit scores either. Based on feedback from Webinar Q&As and classmates from TBA Compliance School, we can elect to give each customer the B-1 Model form. This way we don't have to do any of the comparisons.
|
|
Return to Top
|
|
|
|
|
|
Previous Thread
Index