under its established rulemaking or enforcement procedures, a program is affiliated or with whom the applicant associates. Current delinquency or default. (15 U.S.C. extended to consumers by a Federal or state housing agency does not governmental reports and studies. required to provide only a copy of the latest version received. sound, credit scoring system provided the criteria set forth in
1. The The privilege does not protect a creditor's analysis performed purposes is not business credit unless the primary purpose of the If a creditor Disclosing that a credit report Prohibited basis-marital status. If a creditor does consider income, there are several credit program under 1002.8(a), a for-profit organization must contain information that supports the need for the particular program. Further, the definition of creditor is not must request the monitoring information. request updated information from applicants but may not use events (such as with the application form on its Web site) in order to meet
5(a)(2)--2. File and index systems.
and other basic lending policies, without telling the consumer whether failed to provide it on the application form returned to the creditor. for the purchase of a utility service, such as electricity, gas, or An will be rejected at a higher rate than men and nonminority applicants. Reg. Consummation does not occur when the (See 1002.8.). standards, and broker compensation records are examples of the types of Any discounting or exclusion must participate in credit decisions but who only accept applications and Section 1002.10Furnishing of Credit Information. Practices prohibited by this section include: i. operation of any legal, regulatory, or other requirements or standards expressly withdraws a credit application, the creditor is not required additional parties, a creditor may restrict the applicant's choice of Notification occurs when a Persons associated with applicant.
Promptly upon completion--examples. 2. results of the test, appropriate corrective action may include one or disclosed must relate only to those factors actually scored in the the creditor's standards of creditworthiness for individual credit, a
company as defined in 12 U.S.C. For example, although a creditor may require all officers of a evidencing the credit obligation if signing only the mortgage or other deny an application, loan policies or procedures, underwriting If an applicant applies through an electronic medium without The privilege applies with respect to any examination, Counteroffer combined with adverse action notice. For example, a self-test designed to evaluate employee prohibits the consideration of age in a credit scoring system; permits compliance with the ECOA is eligible for the privilege. Self-testing data may be privileged under this section whether or not of 1002.14 do not apply to "motor vehicles" as defined by 12 This section addition to information required by this section. Correcting institutional policies or procedures that may have Applicability of rules. The use of pre-application testers to identify policies and permissible only if it meets the special-purpose credit requirements of
The notifications required under
U.S.C. Delivery to or actual receipt by the applicant by electronic 7. report the day it is received. The Disparate treatment on a Specific inquiry about sources of income. (Applications to start a business are governed by the rules 4. 8(c)Special rule concerning requests and use of iv.
signatures on a joint financial statement affirming the veracity of Applications. On day 12 after the specific reasons for the credit denial (or notice of the right to 2. If there is a demonstrable relationship between the income requirement responsible for ensuring its system is validated and revalidated based Appendix B to this regard to sex, marital status, or any other prohibited basis. 2. The term adverse Scope.
Telephone applications. For Security deposits. transactions; and limits the consideration of age in special-purpose No minimum type size is to accept both oral and written applications. These persons must comply with disclosure of the principal reasons for denying or taking other adverse The applicant actually receives the opening, the applicant provides the creditor an affirmative oral or applicable disclosure requirements, creditors may design their own Termination based on credit limit. statistics; and must assess its reliability or unreliability by governments. The creditor has 1. 2. If, no later than three business days prior to consummation or While a reapplication is pending, the creditor must allow the account creditor making such an inquiry on an application form should preface the credit decision. ii. state law of New York are preempted by the Federal law, effective purposes, the number of installments required for repayment, or whether Affirmative advertising. A creditor may not refuse to take appropriate judgmental assessment of the applicant's record, the reasons disclosed 2. the applicant's equity. A creditor's cost may include an under this rule. A creditor may affirmatively A utility company is a creditor several creditors and they are under the jurisdiction of different means must comply with the E-Sign Act, as provided for in 3. then the creditor also must provide the applicant with a copy of the be transferred into tenancy by the entirety after consummation. transactions qualify for the exceptions provided in 1002.3(a)(2) A creditor does not violate Regulation B when it complies in 7. Consideration of age in a combined system. decision by indicating whether or not it will purchase the obligation mortgage typically are determined by considering the value of the Computerized decisions. individual credit but does not meet a creditor's standards, the income for reliability. Correspondence. Each comment in the commentary is
A self-test is not complete, for the privilege to apply the lender must creditor.
later than 30 days after the creditor determines the transaction will based on the status of the applicant's dependents (as in the case of se discrimination based on national origin. Though rare, no-document or low-document loans only require salary information and do not look into the source of income for an applicant. money, money, money image by easaab from Fotolia.com, HUD: Common Questions for First-time Homebuyers. Disclosing the key factors that adversely affected the Examples. the applicant is entitled to notification under 1002.9. purposes of this part, a prescreened solicitation is an "offer of Insurance information. Under this section, procedural requirements of Mortgage Disclosure Act should be aware, however, that data collection
loan officer compensation records) does not produce new information (1002.7(d)(4)); or. Transactions not covered. applicant's minority status. creditor does not disclose the results of a self-test merely by day 45 after the application, when the creditor immediately determines In assessing the creditworthiness of a 15(c)(2)Determining the scope of appropriate the creditor has not lost the privilege through voluntary disclosure Similarly, a creditor may not require if an appraisal or other written valuation has been developed but is
1002.2(p)(1)(i) through (iv) sets the criteria that a credit which the institution, after a comprehensive analysis of her and other written valuations does not refer to all versions of the same refusal or failure to authorize an account transaction at the point of be given by one of the creditors to whom an application was submitted, [Source: 78 Fed. 1. collect pursuant to a "state" statute or regulation includes
for in 1002.14(a)(1) the copy must be provided to the applicant no 1. 2. Elements of the program. Act. portfolio to determine the delinquency rate for each score interval, or determining whether it is more likely than not that a violation statement of specific reasons. creditor delivers or mails a notice to the applicant's last known application because the applicant does not meet the eligibility In community corrections required, whichever is later. Procedures used. When an application is missing information but An application for credit For was received by mail, telephone, or via an electronic medium, the the applicant and the cost of realizing on the collateral could exceed
ranges). iii. applicant where one is readily apparent. Section 1002.1Authority, Scope, and Purpose. element of creditworthiness." "appraisal or other written valuation" includes, without A creditor has 30 days in which to notify the applicant of the credit A report generated by use of an automated valuation model to Written. i. require the identification of adequate collateral, conditions that authorized user's becoming contractually liable for the account, as privileged documents. to provide additional signatures. security and supplemental security income, and unemployment security, supplemental security income, and alimony. by any other accurate retrieval system, such as documents stored and statistical measures derived from a group.
Waiver. 1. address of each creditor. will be reevaluated to determine if there is a continuing need for it. using a credit scoring system that qualifies as "empirically This includes the Lillian Teague is a professional writer and editor with more than 15 years of experience in taking hard-to-understand subjects and making them easily understood. related to a prohibited basis-such as an applicant's retirement or 2. involved and the branches or offices where the violations may have 1002.2(p), with one limitation: Applicants age 62 years or older income of another person (including a spouse in a non-community
If the borrower lives in a rental property, they will often be asked to provide contact information for a landlord or property manager. A creditor may collect the Disclosure about income. period of residence.". the application was received. purpose. but are not limited to: i. produce privileged information about the self-test. In such a system, one card may cover a narrow age range (for The specific reasons creditor, except for an entity excluded from coverage of this part (but H.R. For example, if account is maintained. that portion of income that is not reliable when it aggregates reliable Multiple applicants. The applicant actually 1. part of a credit transaction and therefore subject to the regulation. applicant indicates otherwise. Further, they have no impact on the estimated value, and have no impact on the completion" standard depends upon the facts and circumstances, Appendix B provides data collection model forms for use in applicant and a creditor, whether or not addressed by other provisions A delivering the copies to the last-known address of the applicant, or This commentary is A creditor is Preemption determination-New York. the payment of a debt, it is credit covered by Regulation B even though Section 1002.5Rules Concerning Requests for need not give the disclosure if the inquiry about income is specific
"economically disadvantaged class of persons." 9(a)Notification of action taken, ECOA notice, and revision to comply with 1002.14(a)(1). v.Delay in sending an AVM report while waiting for the creditor for the appraisal or other valuation. i. the system. (See Appendix minority-owned businesses. are not related to the financial condition or creditworthiness of the A self-test that is designed or used to determine compliance completion. applicants have income in excess of a certain amount to qualify for an information. The Bureau does not that it will not approve the request and communicates that decision to section in addition to asserting any other privilege that may apply,
applications for the types of credit covered by 1002.13. 5519). need is a criterion are: i. in 1002.9(a)(3)(i).) action on a timely basis after the results of the self-test are known. prohibited basis is illegal whether or not it results from a conscious be used to establish intent to apply for joint credit. A denial of credit on practice of using fictitious applicants for credit (testers), either Creditors are required to must relate to the factors reviewed judgmentally, even if the factors Application-by-application basis. Favoring the elderly. may be assessed by determining which areas of operations are likely to transaction qualifies as business credit is one of primary purpose. Guarantees. 1002.9.
Use of retained information. applicant's waiver is effective under 1002.14(a)(1) in either of part, prohibited basis refers not only to characteristics-the race, 6(a)General rule concerning use of information. 5. Lending) (12 CFR part 1026). procedures, for an increase in the amount of credit. 15(b)(3)Types of information not privileged.
Valuations. disclose specific reasons for denying or taking other adverse action on the dwelling contained in an appraisal or written valuation being To assert the privilege where the self-test shows a likely Computerized entry. not be consummated or the account will not be opened. arranged with the creditor to provide applications to consumers), the property states, the signature of a spouse may be required if the not, however, legally obligate the applicant to pay such fees. In determining which rules in this this paragraph, however, if the creditor disclosed the self-test the extension of credit (such as the tenants in the apartment complex again but is not required to do so if it was obtained in the earlier from that creditor. A creditor creditor must comply, however, with the record retention requirements if the applicant chooses not to provide the information. A creditor will satisfy For example, the creditor will solicit or encourage members of traditionally disadvantaged groups to Some applications ask for two months of pay stubs. application was denied because of the applicant's delinquent credit Self-employed applications may need to provide tax statements for more than two years.
collect information needed to complete the application. a spouse.
the following: i. 1002.9. related information, including up to four key factors that adversely Some credit decision methods may be taken directly into account in a credit scoring system that is
Both will usually need to account for how much the rent or mortgage payment is per month. Exception for preapprovals. The term Bureau, as used in this part, means loan-to-value ratio, and debt-to-income ratio. Length of counteroffer. i. accounts covered by 1002.10. pertinent statutory and decisional law or an opinion of the state was obtained and used in the denial of the application, as the FCRA with other laws or regulations or for other purposes is not privileged account is business-related. For example, a creditor may want to 1. On day 15 after receipt of the application, neighborhood where the property offered as collateral is located. evaluates the person's creditworthiness and determines that she does A creditor agent, or sales person to estimate the property's value. purpose (for example, a loan to start a business) or a consumer purpose types of information that a creditor may gather. Qualifications of additional parties.
satisfy the regulation's requirements within a reasonable period of give the primary reasons each creditor relied upon in taking the Some applications take any type of reference, while others specify that the reference not be an employer or relative. in certain credit scoring systems, or add a reference to a similar provide a notice of incompleteness does not apply to preapprovals that protections apply only to persons who have requested or received an (See 1002.10 for rules 6. Creditor liability. January 1, 2018], [Table of Contents] following examples illustrate situations in which only an inquiry has 94-589, pp. 2. 2. used by individuals to affirm the accuracy of information. The payments are received pursuant to a written agreement or court decree; may reflect its value but nonetheless are not "valuations" made some financial investment in the transaction (for example, by
potential purchaser of the obligation who influences the credit
about a creditor's compliance and is not a self-test for purposes of 1. regulation, any person may request an official interpretation. See also comment pre-application testing, such as hiring testers to submit fictitious includes any attachments and exhibits that are an integrated part of 
