Since the new Dodd-Frank ammendment to adverse action notices, we're using our loan software for turn downs instead of preprinted forms.

When an application has multiple applicants, my software won't let me choose which applicants get the FCRA information. It's either all or nothing.

Am I misunderstanding the FCRA requirements?

Lets say we have two consumers jointly apply for a loan. The primary applicant has an 800+ score and is good a gold. The co-applicant has a 599- and lists a bankruptcy in the last three years. Those two things require us to deny the application.

Here's what I think the applicants should receive...

Primary applicant:
Notice of Action Taken citing bankruptcy as the denial reason. No credit disclosures because their credit report WAS NOT a factor for the adverse action.

Secondary applicant:
Notice of Action Taken citing bankruptcy as the denial reason. Also include the credit disclosures required by FCRA and Dodd-Frank because their credit report and score WAS a factor for the adverse action.

Is this correct? If it is, I'll file a change request with my software vendor. In the meantime I'll have to generate the NoATs in separate transactions.

Thanks,
Mike

Would love to see an answer on this one.

I'm not sure what is actually on your notices. Can you be more specific?

I think your interpretation is correct and i'd be asking for the change request from your vendor.

I can't speak for your software set-up but only the primary applicant must receive the ECOA AAN with the specific reason(s) for denial. Only those whose credit report information had a part in the adverse action receive the FCRA AAN. If you use the combined ECOA & FCRA notice then the ECOA section would be completed with identical reasons. The FCRA section would be completed with the applicable credit report information for the applicant or co-applicant.

But since it is a joint application and a joint credit report was pulled, wouldn't the person with a good credit score still need to be notified that information contained in the report was used in whole or in part on the loan decision?

The FCRA does not address joint reports that I am aware of. If it does I have not seen the opinion, but that doesn't mean one doesn't exist.

A joint report is a combination of the applicant's report and the co-applicant's report. The report still identifies what information would be in each individual's report.

The co-applicant's information in the joint report would not appear in my individual report. I would only be entitled to the FCRA AAN if my individual information had a part in the adverse action.

Ok. Thanks for the clarification. It does make more sense this way. My interpretation would have caused a lot of unnecessary confusion for our customers.

Thanks for the info. I'm sending this conversation to my software company. We'll see what their legal department says.

Mike