I know...B-1 and H-1 are referring to the same model form. This notice doesn't discuss or require a credit score, so that's what we will use since we don't pull scores.

The commenters to the regulations asked whether they could give the standard (B-1 or H-1) notice to all applicants, rather than just those who received less favorable terms. The regulators said:

"Commenters also suggested that the Agencies allow the original creditor to provide a risk-based pricing notice to all consumers who apply for credit, including those who did not receive materially less favorable terms. However, the statute’s general rule does not suggest that a notice should be provided to every consumer who applies for credit. Moreover, the riskbased pricing notice requirement was designed to be a substitute for adverse action notices when a consumer received less favorable credit terms based on his or her consumer report, rather than being denied credit. The Agencies believe that providing a notice to all consumers who apply for credit would diminish the impact of notifying a subset of consumers that they received credit on less than the best terms based on information in a consumer report. Providing a notice to all consumers who apply for credit would also have the effect of allowing consumers to receive a free consumer report whenever they applied for credit. For the foregoing reasons, the Agencies conclude that a person that uses a consumer report to grant, extend, or otherwise provide credit on material terms that are materially less favorable than the most favorable terms available to a substantial proportion of consumers is required to provide a risk-based pricing notice only to those consumers who receive materially less favorable terms."

You can give the exception notices to everyone, but not the standard notice.

I have been communicating with Equifax regarding the disclosure. I haven't had any luck yet. Does anyone know what the Pinnacle Scoring model or the InScore model is?

I almost started a new thread to discuss this, but.....to Buckeye and Comply101...we have the very same situation and have come to the same conclusion. Reading the intro to the final rule says "A person must provide an exception notice to every consumer requesting an extension of credit for a product for which the person uses risk-based pricing, even those who would not otherwise receive a risk-based pricing notice." (Bottom of p.77) Therefore, we can sort by product.

We only RBP on the 1-4 family residential side, so we will exception notice all of them. Consumer loans will continue to get the "Notice to Home Loan Applicant" if they are already required. Auto loan applicants get no notice.

So are you saying that you RBP for 1-4 family residential loans, but that you don't on other consumer loans so that all customers get the same rate?

So are you saying if we do not pull a credit report, we must not be pricing based upon a credit score so no notice H-1 thru H-5 will be given? What if you have a loan officer that gives someone an unsecured loan for 5% and another loan officer gives another person an unsecured loan in the same amount and term at 8%? Isn't that why they want these notices given? Because one customer definitely received better terms than the other but neither one pulled a credit report.

Doug: Yes. Our 1-4 family firsts are subject to RBP where the credit score influences the rate. For all other consumer loans (including home equity loans) the rate is independent of the information on the credit report, including but not limited to the score.

I think our compliance team has this right and the tools are in place for timely compliance, except....my current concern is the use of dated credit reports, given Dan's post above.

The thing that I'm trying to wrap my head around is, if we pull a credit report, how can we honestly say that the rate offered is independent of the information on the credit report? I would think that delq, dti (for which you would use the numbers reported),would factor into it, even unknowingly. The rate would only be independent if it was the same rate for the same loan type/terms for all customers. Perhaps I'm just overthinking the issue.

FWIW, I don't think you are overthinking. I think you are right on. You don't have to call it risk-based pricing for it to be such an animal.

Thanks Cornfed for your clarification. Yes, we won't be providing any RBPN on consumer products because the rate is never based on the credit score. The decision to approve the loan is, but the rate is based on other factors.

So back to Queen Mum's question: It doesn't matter if two people get two different rates on the same loan product if no credit report was pulled - therefore, no disclosure needed.

Right???

My understanding is that if, for that loan product, you do not use a credit report to determine a rate, then no disclosure. (Although you may need to continue to use the NTHLA credit disclosure.)

However, two people getting two different rates on the same loan product would concern me.

Are your loan officers not using credit history as one of the "C's of credit" when making loan decisions?

They would for mtg. loans. I'm talking more unsecured or auto loans. We may look at their payment history with us but not pull a credit report.

Can we use a credit score notice (disclosure) as a substitute for a risked based pricing notice as long as we get new credit scores on all new consumer loans? We would give it to all new loan applicants.

Anyone here providing indirect lending with auto dealers? We allow dealers to charge a discretionary uptick on our established/printed buy rates. We don't know what the rate is until we get the contract/buy the deal.

Credit reports are pulled by us.

Uptick may be based on a number of factors, i.e. maybe a repeat customer to the dealer would not be charged the uptick for a new car. Conversely, the dealer may charge 1/4 of 1% more to a new customer that may be putting more of a downpayment or that didn't buy any frills for the card....

I'm not sure how we would explain this is the notice. 9We don't want the dealers to send the notice...)

It also concerns me because they were both employees and one was female and the other one male. And guess which one got the higher rate? And a more stable credit history.

I am just concerned that if you give the notice to some and not to the others how do you know who to give it to? Only those you pull a credit report on? And then can you just give the credit score notice and not the risk-based pricing notice?

Trees--We also make indirect loans with our auto dealers that sound similar to yours. We have elected to use the exception notice, therefore we will fax the notice along with the approval back to the dealer.

here4: I am going to re-read the Reg again, from the standpoint of installment loans. res. mortgage is a non-event. The notice is going to be on your letterhead, right? What are you using as a reason for the difference? You can't say credit score...don't we have to state something???

Does anyone use TransUnion as their credit bureau? I called them regarding the disclosures for the risk-based pricing notices and someone sent me back a copy of the graph that has to be used. It appears that they won't be providing this notice with the credit report? Anyone else run into this?

I ran into the same issue with Equifax. On their website they have Risk Based Pricing, but it is only the graph.

Trees-I will check into this again and get back to you.

Trees-Since I am using the exception notice, I do not have to give a reason for the difference in interest rates (if the dealer quotes a rate higher than the "buy rate". I will fax the notice along with the approval form to the dealer. No, the notice is not on our letterhead, but it does state our bank name on the top of the form. (My notices look exactly like the model notices H-3, H-4, & H-5)

Can anybody respond ??????

Does anyone know of an online form builder for the Risk Based pricing notices yet? Or do we have to recreate them on our own?

Thanks!

I read thru all the threads - didn't see anything re: my question so here goes. We use the following terms when approving a (vehicle) loan and these term are based on the credit report/ credit score: APR, length of term, i.e. 48 months, & the LTV, i.e. the down payment amount or maximum loan amount that we'll approve. If I use the H-1 RBL Notice, where it says "We used information from your credit report to set the terms of the credit we are offering you, such as the [APR/down payment]".... am I required to enter all terms above or just the APR?

Anyone?