MAGAZINE ARTICLE: by JONATHAN FOXX
Jonathan Foxx is a former Chief Compliance Officer of two publicly traded financial institutions, and the President & Managing Director of Lenders Compliance Group, the nation’s first full-service, mortgage risk management firm in the country.
I think you will be interested in reading my newest article in the National Mortgage Professional Magazine, the national publication that is considered the premier mortgage industry magazine for residential mortgage originators.
In this month's Regulatory Compliance Outlook, I discuss Risk-Based Pricing, which refers to the practice of using a consumer's credit report, reflecting his or her risk of nonpayment, in setting or adjusting the price and other terms of credit offered or extended to a particular consumer.
I consider the use of credit reports or scores in connection with a credit decision, notice requirements, and the disclosure requirements when a lender grants credit on material terms that are not the most favorable terms offered to a substantial proportion of consumers.
TOPICS
- What are Material Terms?
- Who provides the RBP Disclosures?
- Who receives the RBP Disclosures?
- When are the RBP Disclosures sent?
- What are the model forms?
- Are there exceptions?
EXCERPT
WHO PROVIDES THE RBP DISCLOSURES?
Two-Prong Test
There is a two-prong test to determine the RBP compliance requirement, and both conditions must be met:
(1) determine that a consumer report is being used in connection with an application for, or a grant, extension, or other provision of, credit (for personal, household, and family - not business - purposes) to a consumer; and
(2) based in whole or in part on the consumer report, determine if credit is granted, extended, or otherwise provided to that consumer on "material terms" that are materially less favorable than the most favorable terms available to a substantial proportion of consumers from or through the credit grantor.
I am pleased to share this article with you. I hope you will share it with your colleagues.
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Jonathan Foxx
President & Managing Director
(516) 442-3456 X 100
