Credit Report Fee Discrimination?
Recently, the FDIC referred a bank to the Department of Justice (DOJ) for an ECOA violation. Apparently the bank charged married applicants for a single merged report, but charged un-married joint applicants for two separate reports.
The FDIC examiner believed this to be a marital status discrimination violation and the bank was asked to find a vendor (credit report agency) who could accommodate the ordering of a ‘single, merged’ report for unmarried joint borrowers. When told by their vendor that a joint report required a common address, the bank was told to find a new vendor or be cited to the DOJ.
First, let’s talk definitions. The word merge is used in the credit agency industry to describe the merging of information about one consumer that is separately maintained by three national repositories. The repositories, also known as bureaus, are: Equifax, Experian, and TransUnion. Credit agencies obtain much of their information about a consumer from the bureaus and obtain other information from public records and other sources. Because the information collected or maintained by one bureau may be discrepant from the other, the credit agencies utilize a process called “de-duplication”, thus creating a merged report. The merging process does not involve more than one consumer.
Credit agencies do not issue “single” reports for married borrowers. It is called a “joint” report. Joint reports are also available, at the same price, for unmarried borrowers who meet the following conditions:
A) the two individuals live at the same address; and/or
B) the two individuals have jointly-held credit accounts
If two individual borrowers are:
A) currently or recently living at different addresses, and/or
B) have credit accounts in their individual names,
then in order for a lender to have sufficient credit history to render a decision on a mortgage, two individual reports will be required.
Let’s talk “red flags”, a timely topic since non-depositories have until November 1st to put their plans in place. FACTA 114 requires creditors (mortgage broker, lender, bank or credit union) to have a system for detection and mitigation of red flags to help prevent Identity Theft. Under Section 315 of FACTA, any lender who receives an “address discrepancy” on a consumer report must immediately report to the credit agency what information, if any, was obtained to correct or update the address information.
Please email with comments or questions….
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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