Fair Access to Credit Score Disclosures—Coming to a Loan File Near You!

Most mortgage companies don’t realize this yet, but the Fair Access to Credit Score Disclosures are coming to a loan file near you!
We know the Dodd-Frank Wall Street Reform Act is massive—and covers all types of financial entities.

Tucked away in the bill is a section called “Fair Access to Credit Scores” which contains new rules for Adverse Action and Risk Based Pricing notifications.

Be prepared to add another disclosure to your already huge stack of disclosures. The actual form has not yet been created, but stay tuned.

The Risk Based Pricing is took effect January 11, 2011. The new credit score disclosure rules are supposed to become effective July 21, 2011. Here’s how the credit score disclosure and risk based pricing come together to trigger the disclosure.

Under the risk based pricing rule lenders are required to send a notice to any client who is receiving a loan with less than the best rates possible. So, if the best rate out there is for 25% down and a 740 credit score and your clients have neither, you’ll have to send them a credit score disclosure.

When they receive the notice and you may (meaning will) be asked to explain to them why they are paying from .25 pt. to 3.25 pts. extra on their loan.

This time around, the credit reporting agencies must also add certain disclosures when a consumer requests their credit score. Get a copy from your credit supplies of their disclosure because you know your clients will be asking you—not the credit bureaus—what it really means.

Credit scores are going to become more and more available to consumers So my advice is to GET YOUR CLIENTS TO REVIEW THEIR CREDIT BEFORE APPLING FOR A LOAN and start working on your script on how you’re going to explain why they have gotten the disclosure and why have to pay extra fees.
Provided by www.MortgageCurrentcy.com where we interpret the mortgage rules and regulations in plain language.

Heads Up Licensed LO’s – You’ll Need NMLS Credit Authorization starting 11-1-10

NMLS Requiring Your Credit Report Authorization – November 1, 2010. 

 One of the provisions of the National Mortgage Licensing System is that loan officers must be “financially responsible”.  At the time, everyone wondered what the heck that meant?

 Well, you knew it was going to happen.   The NMLS has announced that beginning on November 1st, 2010, all licensed loan officers (not registered) must authorize them to pull a credit report on YOU—regardless of what your state’s requirements—and even if your credit was previously reviewed. 

 If you will be applying for a license in the future, you must authorize the credit report pull as the time you apply.

 Here’s how it will work:

 You’ll have to log in your NMLS account.

 You will be asked some questions to prove our identity. These are personal questions so your company will NOT be able to answer them for you.  Questions that might be asked would be previous addresses, balances on loans, current or previous phone numbers—things that only you would know.

The fee is $15.

 The report will be considered “soft pull”; it will be thru TransUnion, using Vantage Score® and will be a singe report.  (Hint, pull your own TransUnion report and see exactly what you will need to do to fix any errors.)

 The NMLS will NOT be pulling the credit report.  They are serving as your state’s clearinghouse and it will be your state who will access the NLMS database and randomly pull a credit report.

 There are a handful of states, whose rules state that they will be pulling a report by the end of 2010.  The rest of the states will be between January and March, 2011.

 And, you won’t know when your credit will be checked—it could be a year from now.

 It also means that you are giving them the authority to pull a credit report for years to come.

 More info will be posted in the November 10th issue of www.MortgageCurrentcy.com  At the NMLS website http://mortgage.nationwidelicensingsystem.org/profreq/credit/Pages/default.aspx

In addition, the “state agency checklist”  was updated on October 15, 2010.

 http://mortgage.nationwidelicensingsystem.org/profreq/Documents/SAFE%20Compliant%20Requirements.pdf