Looking at the proposed changes to AANs and credit scores and i'm hung up on this wording: (from Appendix C to Part 202--Sample Notification Forms) "In some cases, a person who is required to provide an adverse action notice under the FCRA may use a consumer report, but not a credit score, in taking the adverse action. Under section 1100F of the Dodd-Frank Act, a person is not required to disclose a credit score and related information if a credit score is not used in taking the adverse action. Therefore, the amendments to Forms C-1 through C-5 are only applicable if a credit score is used in taking an adverse action." Again i'm wondering: how do you define "using" a credit score? We don't have set cut-offs for credit scores, but the factors that led to a poor credit score may well be factors in our denials. Are we "using" credit scores? I think so, but seeking some confirmation. Thanks.

To clarify: we might deny a loan for garnishments, collections, etc. or for past due credit obligations with others, factors that i'm sure lower the credit score, but we aren't denying because our cutoff for a credit score is X and their credit score is X minus 50.

Bump...
I could use help with this too.

Dan sums up your question here.

http://www.bankersonline.com/compliance/guru2006/gurus_cmp073106b.html

And here's another comment from earlier today.

http://www.bankersonline.com/forum/ubbth...587#Post1553587

Am I correct in my understanding that Model Form C-1 contains everything that is needed to comply with Reg B, FCRA, and Dodd-Frank rules? I'm looking at the model forms and it appears that C-1 is the same form as we use now but adds a section regarding credit score information that is to be included in Part II. It looks like the new form form will have to be 2 pages as this new addition will not fit on the form as it is now on just one page.

Cory,

I agree with your understanding. I don't like the idea that the form will now be two pages.

Also, I'm wondering if we use the Risk Based Pricing exception notices, can we still use the old forms. It would appear so, based on the comment in the FCRA Proposed Rules that "Nothing in section 1100F of the Dodd-Frank Act or this proposal limits the ability of creditors to provide these exception notices in lieu of the general risk-based pricing notice".

Also, ABA issued a summary that stated:
2. Does a creditor who currently provides a credit score exception notice have to make any changes or add credit score information to that notice?
No. The Agencies noted in the Supplementary Information to the proposed rule that nothing in Section 1100F of the Dodd Frank Act or the proposal limits the ability of creditors to provide these exception notices in lieu of the general risk-based pricing notice. Thus, under the proposal, creditors choosing to provide the risk-based exception notice need not provide the key factors affecting the credit score.

My question is whether we should use the new model forms, even if they provide "more" information than necessary?

I was wondering the same thing. Can someone clearify?

sewanee and Chuck: The new model forms are standard RBP forms, not exception notices. So the new H-6 form (which is the H-1 form plus credit score information) must be given only to those who are receiving rates that are materially less favorable, not to every borrower as the exception notices are.

So if we are providing the exception notice, than the h-6 would not be required correct? Thats not changing.

That doesn't change under the proposed regulations, which is all we have so far.

On July 21st (think that's the right date?), our adverse action notices need to change to reflect the new credit score disclosure requirements though, right? Anyone who uses hard copy (paper) adverse action notices talked to a vendor yet who has given information on having those ready? Having no luck with my vendor yet.

Yes your AAN needs to change. I've received copies of the new AAN from our vendor. I would try giving them a call.

I hate to keep beating a dead horse but I want to make sure I am understanding this correctly.

If we are currently giving the credit score disclosure as an exception to risk-based pricing notice, can we just provide this same credit score disclosure with our AAN and not have to use the H-6?

This is the information I got from our Wolters Kluwer rep regarding these changes. For Risk Based Pricing Notices: Model H-6 is much like Model H-1 and Model H-7 is much like Model H-2 but the new model documents include credit score information, which is required IF the credit score was used in determination of material credit terms.
For the Reg B Adverse Action Notices:
The document changes include:
 Add credit score decision information
 Remove the Appraisal Notice and provide as a separate document as this is not required on the Adverse Action and the Appraisal Notice will be revised in the future under pending Dodd-Frank changes.

Do we have to remove the appraisal notice? Can we just leave it there for now?

I realize a bank may choose various options to disclose their MLOs and the NMLS ID#s, but I'm curious if any of you met resistance from your MLOs that they do not want their names on your website? (I guess it is stemming from privacy, safety concerns........)

I am with lilbit. If we provide the Exception Notice, then why do we have to type in all the same information in the AA Notice?

The Fed just released the new rules and specifically addressed the question of whether you really have to integrate the new credit score information into your AAN, or if you can just attach a document. They were pretty clear that the information must be integrated into a single AAN document:

from page 12 of the AAN rule:
Disclosing credit score information on a separate document. Several industry commenters requested a model form that consumer reporting agencies could use to provide creditors the credit score information needed for adverse action notices under section 1100F of the Dodd-Frank Act. These commenters asked that creditors be permitted to attach the consumer reporting agency’s form to their adverse action notices, and provide both documents to the consumer. These commenters did not believe that the creditor should be required to integrate the credit score information into its adverse action notice.

Section 615(a)(1) of the FCRA requires a creditor to provide notice of adverse action to consumers against whom it takes adverse action based in whole or in part on information contained in a consumer report. Section 1100F of the Dodd-Frank Act amended Section 615(a) to require a creditor to provide such consumers credit score information. Providing a form with credit score information separately from an adverse action notice does not appear to be consistent with the legislation.

Sorry to reply on myself, but here's more, specifically addressing if the exception notice precludes adding credit score to AAN, page 14:

For the reasons discussed below, the Board does not believe a creditor would comply with the FCRA adverse action provisions in section 1100F by providing a credit score disclosure exception notice or section 609(g) notice. In addition, the Board does not believe that the 609(g) notice may be integrated into a FCRA adverse action notice.

mtngrrl - do you have a link to what you are quoting from?

Sorry...

Press release:
http://www.federalreserve.gov/newsevents/press/bcreg/20110706a.htm

Credit Score Disclosure Rules:
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20110706a1.pdf

AAN:
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20110706a2.pdf

Thank you!!!

So am I understanding this to say that providing the Exception Notice in lieu of a RBP notice does not satisfy the requirements of putting the information in the AA Notice? Yet it goes on to say that the RBP Notice cannot be added to the AA Notice? I am confused.

I still think it is redundant to send the Exception Notice and have to retype all the same information into the AA Notice to go out to the customer at the same time. Talk about confusing the consumers.