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The Office of Comptroller of Currency is issuing additional Fair Credit Reporting Act examination procedures regarding affiliate marketing, identity-theft red flags, and address discrepancies.  The procedures are additions to existing FCRA procedures in OCC Bulletin 2006-49.  The procedures address three sections of the FCRA.

The OCC’s press release states in part:

Section 624 has been added to Module 2 of the existing examination procedures. This section pertains to affiliate marketing and opt-out notices to limit solicitations (12 CFR 41.20 – 41.28). The mandatory compliance date for these rules is October 1, 2008.

Section 605(h) has been added to Module 4 of the existing procedures, and section 615(e) has been added to Module 5. Section 605(h) pertains to duties of users of credit reports regarding address discrepancies (12 CFR 41.82), and section 615(e) pertains to duties regarding the detection, prevention, and mitigation of identity theft and duties of card issuers regarding changes of address (12 CFR 41.90 and 41.91 respectively). The mandatory compliance date for these rules is November 1, 2008.

The OCC will incorporate the new procedures in an updated Comptroller’s Handbook series when all FCRA exam procedures are completed.  Until the revised handbook is issued, examiners will use a supplemental attachment.  The new OCC issuance rescinds OCC Bulletin 2006-49. 

For a full copy of the press release, please click here.

Tags: Consumer Reports/Credit Reports, FCRA, Mortgage Banking - General, OCC, Regulations by the Editor
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On May 19, 2008, the Board of Governors of the Federal Reserve and the Federal Trade Commission jointly issued proposed rules designed to implement the risk-based pricing provisions in section 311 of the Fair and Accurate Credit Transactions Act of 2003.  See 73 Fed. Reg. 28,966.

The proposal included model forms that creditors could use to comply with the requirements of the proposed rules. 

Mortgage Law Blog previously posted notice of the proposal.

The agencies have issued a technical correction to the proposal, stating:

Due to a technical error, the second page of Model form H-4 of the Board’s proposal and Model form B-4 of the Commission’s proposal, as published, erroneously included a row entitled “Key factors that adversely affected your credit score.” As discussed in the preamble to the proposed rules, the notice provided in connection with the credit score disclosure exception for non-mortgage credit is not required to include the key factors that affected the credit score (73 FR 28983).  This document corrects this error by amending Model forms H-4 and B-4 to delete this row.

For a full copy of the Federal Register notice containing the correction, please click here.

Comments remain due August 18, 2008.

Tags: Consumer Protection, Consumer Reports/Credit Reports, FACT Act, FCRA, Federal Reserve, Federal Trade Commission, Mortgage Banking - General, Regulations, Risk-Based Pricing, Unfair or Deceptive Acts by the Editor
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The Federal Trade Commission and the Board of Governors of the Federal Reserve have proposed new risk-based pricing rules under the Fair and Accurate Credit Transactions Act of 2003.  

According to the agencies’ joint summary, the new rules:

generally require a creditor to provide a risk-based pricing notice to a consumer when the creditor uses a consumer report to grant or extend credit to the consumer on material terms that are materially less favorable than the most favorable terms available to a substantial proportion of consumers from or through that creditor. The proposed rules also provide for two alternative means by which creditors can determine when they are offering credit on material terms that are materially less favorable. The proposed rules also include certain exceptions to the general rule, including exceptions for creditors that provide a consumer with a disclosure of the consumer’s credit score in conjunction with additional information that provides context for the credit score disclosure.

Comments are due August 18, 2008.

For a copy of the Federal Register notice, please click here.

Tags: Consumer Protection, Consumer Reports/Credit Reports, Federal Reserve, Federal Trade Commission, Financial Literacy, Mortgage Banking - General, Regulations, Risk-Based Pricing, Unfair or Deceptive Acts by the Editor
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The Department of Housing and Urban Development’s Federal Housing Administration has issued Mortgagee Letter 08-11 regarding Nontraditional Credit Verification and Evaluation. 

The Guidance notes that FHA long has allowed mortgagees to establish credit history through so-called “nontraditional” sources, including compilations of payment history for rent, utilities, phone service, cable television and payments to local stores.

FHA permits nontraditional analysis where there is insufficient information with the credit bureaus to establish a credit score or too few credit lines to make the scoring useful.  Nontraditional credit sources are not permitted for use to improve otherwise poor credit histories.

In issuing the Guidance, FHA states:

This mortgagee letter provides guidance to lenders and underwriters for establishing and evaluating nontraditional credit histories and also describes FHA’s acceptance of those enterprises that can develop a verifiable credit history, no less than 12 months in duration, for borrowers with limited traditional credit.  This guidance is effective immediately but must be considered for borrowers without traditional credit beginning with case numbers assigned 30 or more days after the date of this mortgage letter.

For a full copy of the Guidance, click here.

Tags: Consumer Protection, Consumer Reports/Credit Reports, HUD & FHA, Mortgage Banking - General, Regulations by the Editor
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Mortgage Law Blog issues this reminder that the deadline is Monday, February 25, 2008 for comments to the Federal Trade Commission regarding the impact and effectiveness of state and private credit report freeze laws and initiatives.

The FTC’s press release requesting comments states in part:

Thirty-nine states and the District of Columbia have enacted laws providing consumers the right to place credit freezes, and each of the three nationwide consumer reporting agencies (“CRAs”) is offering a commercially-developed credit freeze option. In general, once a consumer initiates a credit freeze with a CRA, the freeze prevents that CRA from releasing a consumer report (i.e., a credit report) about that consumer unless the consumer temporarily lifts or permanently removes the freeze. A credit freeze may help prevent identity thieves from opening new accounts in consumers’ names, because businesses typically will not extend new credit (or provide certain other benefits) without first viewing the consumer’s credit report.

In April 2007, the President’s Identity Theft Task Force (“Task Force”) issued a strategic plan to make the federal governments effort’s more effective and efficient in the areas of identity theft awareness, prevention, detection, and prosecution, www.idtheft.gov/reports/StrategicPlan.pdf. As part of its strategic plan, the Task Force recommended that the FTC, with support from the Task Force member agencies, assess the impact and effectiveness of credit freeze laws and report on the results, in order to assist policymakers in considering the appropriateness of a federal credit freeze law.

Commission staff invites interested parties to submit written comments on the impact and effectiveness of state credit freeze laws, as well as the credit freeze options offered by the nationwide consumer reporting agencies. Comments must be received on or before February 25, 2008.

The FTC’s detailed information for comments can be found here.

Tags: Consumer Reports/Credit Reports, Credit Report Freezes, Industry Involvement, Mortgage Banking - General, Regulations, State Regulation by the Editor
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