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Adverse Action Based on Non-CRA Information

Jonathan Foxx
Jun 24, 2016
The Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey for the week ending June 3 offered a mixed data picture, with vibrant seasonally adjusted indices and dreary unadjusted indices

Question: We increased the cost of credit to a borrower on the basis of information we did not receive from a consumer reporting agency. Could you let us know what are our obligations, such as disclosure, under these circumstances?

The type of information covered by the disclosure requirement is information obtained from a party other than a consumer reporting agency that bears upon the consumer’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living. [15 USC § 1681m(b)(1)]

If a company denies or increases the charge for consumer credit in whole or in part because of certain information obtained from a party other than a consumer reporting agency, the company must, at the time that the adverse action is communicated to the consumer, clearly and accurately disclose to the consumer his or her right to make a written request for the reasons for the adverse action within 60 days.

If the consumer makes such a written request in a timely manner, the company must provide the reasons for the adverse action within a reasonable period of time. 
[15 USC § 1681m(b)(1)]

Jonathan Foxx is president and managing director of Lenders Compliance Group, Brokers Compliance Group, Servicers Compliance Group and Vendors Compliance Group, national companies devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted by phone at (516) 442-3456, by e-mail at or visit

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