Academic journal article ABA Banking Journal

Appraisals Aren't Credit Information

Academic journal article ABA Banking Journal

Appraisals Aren't Credit Information

Article excerpt

Q. We declined a consumer loan because, based on the appraisal, the value of the collateral was insufficient. This was the sole reason for the declination. The consumer's credit report and score, although obtained by the bank, had no bearing on the decision to deny the loan. We are being cited in an audit for not stating on the adverse action notice that the credit decision was based on information from a third party--the appraiser. Is that correct? A. No. FCRA, section 615 (b): "Adverse Action Based on Information Obtained from Third Parties Other Than Consumer Reporting Agencies," applies. It states:

"(1) In general. Whenever credit for personal, family, or household purposes involving a consumer is denied or the charge for such credit is increased either wholly or partly because of information obtained from a person other than a consumer reporting agency bearing upon the consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, the user of such information shall, within a reasonable period of time, upon the consumer's written request for the reasons for such adverse action received within sixty days after learning of such adverse action, disclose the nature of the information to the consumer. The user of such information shall clearly and accurately disclose to the consumer his right to make such written request at the time such adverse action is communicated to the consumer. …

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