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National Mortgage Professional
Jan 04, 2006

FACT Act rules on use of medical information for consumer creditMortgagePress.comFACT Act, medical information On Nov. 17, the Office of the Comptroller of the Currency, the board of governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision and the National Credit Union Administration announced publication of final rules that create exceptions to the general prohibition of using medical information to determine a consumer's eligibility for credit under the Fair and Accurate Credit Transactions Act of 2003. The final rules issued by the agencies allow a creditor to obtain and use medical information to make a determination of a consumer's eligibility for credit, provided that: †The information is of a type routinely used in making credit eligibility determinations, such as information relating to debts, expenses, income and benefits; †The creditor uses the medical information in a manner similar to how it would use comparable information that is not medically related; and †The creditor does not factor in the consumer's physical, mental or behavioral health, condition or history, type of treatment or prognosis when making such determination. The final rules provide four examples of the types of information routinely used to determine credit eligibility: †The dollar amount, repayment terms, repayment history and similar information regarding medical debts to calculate the repayment ability of the consumer; †The value, condition and lien status of medical equipment that may serve as collateral for the loan; †The dollar amount and continued eligibility for disability income, workers' compensation or other health or medical benefits relied on as a source of income; and †The identity of creditors to whom outstanding medical debts are owed in connection with a credit application, including a transaction involving the consolidation of medical debts. The final rules also provide specific exceptions for when a creditor may obtain and use medical information to make a determination of a consumer's eligibility for credit: †To determine whether the use of a power of attorney or legal representative that is triggered by a medical condition is necessary or whether the consumer has the legal capacity to contract when a person seeks to exercise a power of attorney or act as legal representative for a consumer based on an asserted medical condition; †To comply with local, state or federal laws; †At a consumer's request, to determine whether the consumer qualifies for a legally permissible special credit program or credit-related assistance program that is designed to meet the special needs of consumers with medical conditions and is established and administered pursuant to a written plan that identifies the class of persons that the program is designed to benefit and establishes procedures and standards for extending credit or providing other credit-related assistance under the program; †To the extent necessary for purposes of fraud prevention or detection; †In the case of credit for the purpose of financing medical products or services to determine and verify the medical purpose of a loan and the use of proceeds; †Consistent with safe and sound practices, if the consumer or the consumer's legal representative specifically requests that the creditor use the medical information in determining the consumer's eligibility for credit to accommodate the consumer's particular circumstances, and such request is documented by the creditor; †Consistent with safe and sound practices, to determine whether the provisions of a forbearance practice or program that is triggered by a medical condition apply to a consumer; †To determine the consumer's eligibility for the triggering of or the reactivation of a debt cancellation contract or debt suspension agreement, if a medical condition is a triggering event for the provision of benefits under the contract or agreement; or †To determine the consumer's eligibility for the trigger of or the reactivation of a credit insurance product if a medical condition is a triggering event for the provision of benefits under the product. The effective date for the final rules is April 1. For more information, visit
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