Experian to assist lenders in compliance with new risk-based pricing regulations – NMP Skip to main content

Experian to assist lenders in compliance with new risk-based pricing regulations

NationalMortgageProfessional.com
Aug 25, 2010

Experian, a global information services company, has announced its comprehensive offering of products and services to help clients comply with consumer notification requirements related to the new Risk-Based Pricing Rule. Beginning Jan. 1, 2011, the Federal Trade Commission (FTC) and the Federal Reserve Board (FRB) have mandated that lenders send consumers a Risk-Based Pricing Notice if the lender does not provide the consumer with the most favorable rate. “While Jan. 1, 2011, is still months away, lenders must begin their preparations to comply with the new regulation now,” said Andrew Sheehan, senior vice president of Experian Consumer Information Services. “Lenders should be evaluating their underwriting processes and understanding their resource and technology action plans to determine the best method to ensure effective compliance with the rule.” Experian provides clients with a suite of products that include VantageScore, credit score disclosure products, risk-based pricing services and custom consulting to fulfill their compliance obligations. “It’s a priority for Experian to not only serve our clients, but also to help increase consumer awareness about credit reporting and credit scoring,” said Steven Wagner, president of Experian Consumer Information Services. “We have found that consumers want to better understand their credit, and with the new requirements, we see this as another opportunity for the consumer to gain more insight and control.” Risk-Based Pricing Notice For lenders who want to minimize costs, use a custom score when decisioning or closely monitor scorecard performance, a Risk-Based Pricing Notice may be the preferred option. The Risk-Based Pricing Notice--which is provided via a standard letter that is simply generated and distributed--is supplied to a specific segment of consumers who apply for credit and may not have received the most favorable credit terms or rates. The notice must be provided to a consumer after the terms have been set but prior to the consumer becoming contractually obligated. This option manages costs and reduces the volume of ongoing consumer disclosures. Experian can help lenders determine which consumers should receive a notice by performing score validations, determining portfolio cut-off scores, developing new risk-based pricing strategies or creating regulatory-compliant portfolio reports to ensure a successful compliance strategy—today and in the future. Credit Score Disclosure Exception By choosing the Credit Score Disclosure Exception, lenders agree to provide all consumers with an exception notice that includes a credit score and information about how that score ranks compared with the general population. With access to Experian’s national score distribution graphs and tables, lenders can seamlessly integrate this information into their own disclosure exception notices. For those lenders without the time or resources to create their own disclosure exception notices, Experian has a product that can be automatically generated with a credit report request. This option is a good alternative for lenders concerned about system integration, accuracy, timing and delivery of the notice. “By making it easier for our clients to comply and freeing up their valuable internal resources, we believe that we can not only help with the challenges of complying, but also identify new ways to increase lead generation and cross-selling opportunities,” said Sheehan. For more information, visit www.experianplc.com.
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