Compliance Blog

Written by Steve Van Beek

There have continued to be quite a few questions regarding the credit score information disclosures.  One of them relates to whether a credit union that does risk-based pricing - and sends the credit score exception notice disclosures - has to later give the credit score information if they take adverse action on an application.

The Fed said the credit score exception notices under Regulation V are not a substitute for the adverse action notices:

"The Board does not believe a creditor would comply with the FCRA adverse action provisions by providing a credit score disclosure exception notice or section 609(g) notice.  These notices provide different information and have different timing requirements than adverse action notices."

Co-applicants.  In a joint applicant situation, the Fed indicates that credit unions would need to send separate adverse action notices to each applicant.  The FCRA adverse action requirement applies to "any consumer" who experiences adverse action.  And, the Fed states that:

"Given privacy and customer relations concerns, the Board expects that creditors would generally provide separate FCRA adverse action notices to each applicant with only the individual's credit score on each notice." 

 Industry commenters wanted the flexibility to add language that would inform consumers that the reason for the adverse action may have been the credit score of their joint applicant.  The Fed declined by stating it would "complicate the disclosures without providing a substantial benefit to consumers."  

I'm just thinking out loud about how the CFPB would have handled that request?  To me, that seems like pretty useful information to a co-applicant who was, for example, turned down for a loan.

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NAFCU's Congressional Caucus will be at a new location in 2011.  Of course, we will still be in DC - but this year Caucus will be from September 18-21 at the Mayflower Renaissance Hotel.  Be sure to attend and make your credit union's voice heard on issues like the CFPB and Housing Reform.

The keynote speaker will be Terry McAuliffe, a Virginia Democrat and successful businessman and entrepreneur.

Congressional Caucus is a great time to meet with your representatives and have a frank discussion about the impact of federal regulations on your ability to serve your members.  This recently updated study from the Small Business Administration's Office of Advocacy might provide some good data.  It clearly shows how federal regulations disproportionately impact small businesses.  I have a feeling this trend will not be reversing as Dodd-Frank is implemented.

Caucus is open to all credit unions and if you register by July 29 you can save $100.