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Denied based on outside information.

Answered by: 
Michele Strickland

Question: 
Can you provide guidance on what is considered an outside source? On the Notice of Action Taken in the Disclosure of Use of Information Obtained from an Outside Source, what would be considered an outside source. We have a customer where the denial is based on “Collection Action or Judgment” which was identified when the account officer did a search through our State’s website. Would this constitute such a disclosure and if the borrower wanted to request a copy as they have a right to would we simply give them the name of the website?
Answer: 

There is not a definition under Regulation B for “outside source”. It’s intentionally broad to encompass anything other than a credit report for a reason which is credit related. For example, citing insufficient collateral value would not be considered an outside source as the value of the property is the issue and not the credit of the applicant. In the example provided, yes, this would be considered credit related information from a source outside the credit reporting agency and it would be appropriate to check the box and provide a copy of the information you obtained should the applicant ask.
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First published on 05/12/2024

Filed under: 
Lending
Filed under lending as: 
Compliance/Compliance Management
Lending

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