Question: We completed an examination by our regulator and just received the audit report. One item sticks out as an adverse finding and causes some concern. It deals with an FCRA violation. The regulator’s view is that we did not report accurate borrower information to a credit bureau and even questions the integrity of our reported data. So, our question is this: what constitutes accuracy? Also, what is involved in data integrity of borrower information?
The Fair Credit Reporting Act (FCRA) offers a description relating to “accuracy” in the context of reporting information to a Consumer Reporting Agency (CRA). Your financial institution should be providing certain pieces of information to the CRA about an account or other relationship with the consumer. The information should, at minimum:
1. Reflect the terms of and liability for the account or other relationship;
2. Reflect the consumer’s performance and other conduct with respect to the account or other relationship; and
3. Identify the appropriate consumer.
[12 CFR § 334.41(a)(FDIC); 16 CFR § 660.2(a)(FTC); 12 CFR § 222.41(a)(FRB); 12 CFR § 41.41(a)(OCC); 12 CFR § 717.41(a)(NCUA)]
In the context of information, “integrity” means that information the financial institution provides to a CRA about an account or other relationship with a consumer. The information being reported should, at minimum:
1. Be substantiated by the financial institution’s records at the time that the information is furnished;
2. Be furnished in a form and manner that is designed to minimize the likelihood that the information may be incorrectly reflected in a consumer report; and
3. Include the information in the financial institution’s possession about the account or other relationship that the appropriate federal financial institution regulator or the FTC, as applicable, has:
a. Determined that the absence of the information would likely be materially misleading in evaluating a consumer’s creditworthiness, credit standing, credit capacity, general reputation, personal characteristics, or mode of living; and
b. Listed in section I.(b)(2)(iii) of the “Interagency Guidelines Concerning the Accuracy and Integrity of Information Furnished to Consumer Reporting Agencies” (which section lists the credit limit for an account, if applicable and in the furnisher’s possession).
[12 CFR § 334.41(e)(FDIC); 16 CFR § 660.2(e)(FTC); 12 CFR § 222.41(e)(FRB); 12 CFR § 41.41(e)(OCC); 12 CFR § 717.41(e)(NCUA)]
Jonathan Foxx, Ph.D., MBA, is the Chairman and Managing Director of Lenders Compliance Group, the first and only full-service, mortgage risk management firm in the United States, specializing exclusively in outsourced mortgage compliance and offering a suite of services in residential mortgage banking for banks and non-banks. Information contained in this article is not intended to be and is not a source of legal advice. If you would like to contribute a question, please submit it to [email protected].