Compliance Blog

Posted by Anthony Demangone

NCUA recently issued a legal opinion letter that addresses this question: Is a federal credit union required to review information provided by a loan applicant that is not found within a credit report? 

NCUA responded, indicating that Regulation B does indeed require a creditor to review such information in some situations. Here's what NCUA said:

Generally, creditors may restrict the kinds of credit history and credit references they will consider in making a determination of creditworthiness as long as the restrictions are applied to all applicants without regard to any prohibited basis, such as race, sex, or marital status. 12 C.F.R. Part 202, Supp. I, 6(b)(6). Upon an applicant’s request, however, Reg B requires creditors, in evaluating the creditworthiness of an applicant, to consider any information an applicant may present tending to indicate the credit history being considered does not accurately reflect the applicant’s creditworthiness. 12 C.F.R. §202.6(b)(6)(ii). As further explained in the Official Staff Commentary to Reg B, creditors, at an applicant’s request, must consider credit information not reported through a credit bureau when the information relates to the same types of credit references and history the creditor would consider if reported through a credit bureau. 12 C.F.R. Part 202, Supp. I, 6(b)(6). Thus, for example, if an FCU generally relies on only credit reports from one of the major credit reporting agencies, an FCU will be required, if a member seeking credit requests it, to consider additional information meeting the criteria of 12 C.F.R. §202.6(b)(6)(ii).

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With the GOP taking control of the House and the Democrats retaining control of the Senate, we should see a period of "gridlock." This should tap down the chance of any major regulatory moves, such as extending interchange reform to credit cards.  

In addition, with Republicans making gains in the Senate, it would seem to force President Obama to appoint a more moderate candidate to head the CFPB.  However, Elizabeth Warren is busy setting up the new agency, so it will interesting to see how much sway a moderate head of the agency would have when dealing with the Warren-created agency architecture.  

Also, as the House moves to the GOP, the chairs of the committees will switch as well.  Rep. Barney Frank (D-Mass.), while victorious, will have to hand over his House Financial Services Committee gavel to the other side. Committee chairs have a large amount of power in Congress.

But before one exhales too quickly, keep in mind that none of the changes will slow the regulatory avalanche that is already screaming down Mount Compliance.  The Fed is extremely busy "tweaking" Regulation Z, and the CFPB has a slew of mortgage-related regulations that it will work on once it sets up shop. We still have a few years of pain, especially in the area of mortgage lending.