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 www.ftc.gov.
