Mortgage Concepts is a recurring video series covering best practices and compliance education for California mortgage loan originators. This video covers when a loan is denied, instead of approved, how the FCRA requires the loan originator to disclose the adverse action. For more information, see Part 1.

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FCRA disclosures required

An individual who takes an adverse action against a consumer based on information found in the consumer’s credit report provided by a consumer reporting agency must provide:

  • oral, written, or electronic notice of the adverse action;
  • written or electronic disclosure of the credit score, or credit scores upon which the adverse action is based;
  • the range of possible credit scores under the model used;
  • the date the credit score was created;
  • the name of the person or entity that provided the credit score; and
  • up to four key factors that adversely affected the credit score (five, if one of the key factors is the number of inquiries);
  • the name, address and telephone number of the consumer reporting agency that furnished the report to the individual taking the adverse action whether based wholly or in part of such a report;
  • a statement the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken;
  • a disclosure of the consumer’s right to receive a free copy of the consumer report upon which the adverse action is based within 60 days of the receipt of the notice; and
  • a disclosure of the consumer’s right to dispute the accuracy or completeness of the information contained in the consumer credit report. [15 USC §1681m(a); 15 USC §1681g(f)(1)]

An applicant is to be notified when credit is denied either wholly or in part based on the information obtained from a source other than a consumer reporting agency. [15 USC §1681m(b)(1)]

Also, when an adverse action is taken based on information from an outside source other than a consumer reporting agency, a creditor must provide the section 615(b) disclosure. This rule also applies when the creditor obtains information from an affiliate other than a consumer report or other than information concerning the affiliate’s own transactions or experiences with the consumer. [12 CFR §1002.9]

Related article:

MLO Mentor: The Fair Credit Reporting Act, Part II