Flood Protection Act and FCRA

What types of structures are eligible for coverage under NFIP?

- Residential, industrial, commercial, and agricultural buildings that are walled and roofed structures that are principally above ground - Buildings under construction where a development loan is made to construct insurable improvements on the land (insurance can be purchased to keep pace with the new construction) - Mobile homes that are affixed to a permanent site, including mobile homes that are part of a dealer's inventory and affixed to permanent foundations - Condominiums - Co-operative and apartment buildings - Flood insurance coverage is also available for personal property and other insurable contents contained in real property or mobile homes located in special flood hazard areas (the property must be insured in order for the contents to be eligible) - Nursing homes and assisted living facilities - Dormitories - Grain bins, silos, or other farm buildings

What types of structures are NOT covered under NFIP

- Unimproved land, bridges, dams and roads - Mobile homes not affixed to a permanent site - Travel trailers and campers - Converted buses or vans - Buildings entirely in, on, or over water into which boats are floated - Pole Barns (unless they qualify as buildings)

5 elements within the act required to be in the flood determination notice

1. A warning that the building or the mobile home is or will be located in a special flood hazard area 2. A description of the flood insurance purchase requirements 3. A statement whether Federal disaster relief assistance may be available in the event of damage to the building or mobile home caused by flooding in a Federally declared disaster for participating communities 4. The details of the availability of private flood insurance coverage 5. Escrow requirements for residential loans, if applicable 6. A statement whether Federal disaster relief assistance may be available in the event of damage to the building or mobile home caused by flooding in a Federally declared disaster for nonparticipating communities

Flood determination and form exceptions

1. Any state-owned property that is covered under a policy of self-insurance satisfactory to the director of FEMA, 2. Loans with an original principal balance of $5,000 or less, which have a repayment term of one year or less. 3. The NFIP does not insure land, and the law does not address mortgages secured by land alone. Raw land is not insurable under the NFIP. Therefore, if the purpose of a loan transaction is to facilitate the purchase of land for subsequent development, and any current building (structure) on the real property is of nominal value, the wording of the mortgage must specifically exclude the building as part of the security for the loan in order to avoid the mandatory purchase requirement.

What is the definition of private flood insurance

2) Provides flood insurance coverage that is at least as broad as the coverage provided under a Standard Flood Insurance Policy (SFIP) for the same type of property, including when considering deductibles, exclusions, and conditions offered by the insurer. To be at least as broad as the coverage provided under a SFIP, the policy must, at a minimum: (i) Define the term "flood" to include the events defined as a "flood" in a SFIP; (ii) Contain the coverage specified in a SFIP, including that relating to building property coverage; personal property coverage, if purchased by the insured mortgagor(s); other coverages; and increased cost of compliance coverage; (iii) Contain deductibles no higher than the specified maximum, and include similar non-applicability provisions, as under a SFIP, for any total policy coverage amount up to the maximum available under the NFIP at the time the policy is provided to the lender; (iv) Provide coverage for direct physical loss caused by a flood and may only exclude other causes of loss that are excluded in a SFIP. Any exclusions other than those in a SFIP may pertain only to coverage that is in addition to the amount and type of coverage that could be provided by a SFIP or have the effect of providing broader coverage to the policyholder; and (v) Not contain conditions that narrow the coverage provided in a SFIP;

How long are opt-outs active?

5 years

Consumer reporting agencies (CRAs)

A "consumer reporting agency" is a person (which includes organizations) which, for a fee or on a non-profit basis, regularly engages in assembling consumer reports for the purpose of furnishing them to third parties. Their FCRA responsibilities include the following activities: Maintaining accurate and complete information in their files Providing reports to users of reports such as banks, only if the user has a permissible purpose Investigating disputes regarding accuracy of information Maintaining active duty and identity theft alerts Notifying banks and other report users about possible address discrepancies Providing the consumer's information about the consumer in the agency's files Providing free consumer reports to people who have been denied credit, insurance, or employment or experienced other adverse action based on information contained in the report Providing one free credit report annually to consumers upon request (pertains to the three nationwide CRAs

What are the bank's responsibilities when a customer is a victim of Identify Theft?

A bank must have policies and procedures in place that address the bank's duty to protect people who have been victims of identity theft from inaccurate consumer reports. A bank must have procedures to prevent the re-reporting information that the CRA has informed the bank is related to identity theft, based on an identity theft report or other information A bank may not sell, transfer, or place a debt for collection if the CRA has identified the debt is related to identity theft If a consumer notifies the bank that he or she is a victim of identity theft and gives the bank an identity theft report, the bank may not furnish information related to the identity theft unless the bank subsequently knows or is informed by the consumer that the information is correct A bank that finds it furnished inaccurate information due to identity theft must promptly notify each CRA of the inaccuracy and provide correct information, just as it would do for any other inaccurate information. Going forward, the bank must report only complete and accurate information

If a consumer disputes the accuracy of information in his or her consumer report, the CRA and bank that provide the information must investigate the claim. If the information is not accurate, they must correct it. What types of disputes does this cover?

A credit card or other loan the consumer never had Scheduled payment amounts Payments reported as late that were timely Payment dates or amounts High balances Payment dates Dates of account opening or closure Account balances Credit limits and Any other information that bears on the consumer's creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living

Generally, consumer reporting agencies cannot provide consumer reports for marketing purposes. But there is a limited exception, what is it?

A limited exception allows consumer reports to be used for prescreening purposes when identifying consumers who are most likely to qualify for, and be interested in, a credit or insurance product. However, such use is subject to strict conditions.

When is a risk based notice required?

A risk-based pricing notice is required if the creditor uses a credit report (or credit score) to determine a material term of a consumer credit, e.g., the annual percentage rate (APR). The regulation does not apply to leases or business credit.

FCRA requires that FCRA adverse action notices include credit scores if any "numerical credit score" is used in taking the adverse action based in whole or in part on any information in a consumer report. These notices must be in writing and should contain the following information:

A statement that a credit score is a number that includes information in a consumer report and that a credit score can change over time to reflect changes to the consumer's credit history The current credit score of the consumer or the most recent credit score previously calculated by the credit reporting agency The range of possible credit scores under the model used to generate the credit score A statement indicating that the information and credit scoring model may be different than the credit score that may be used by the lender The key factors that adversely affected the credit score, up to four factors, except up to five if one of the factors is the number of inquiries for the consumer report The date on which the credit score was created The name of the consumer reporting agency or other person that provided the credit score

Affiliates (FCRA)

Affiliates are entities that are related by common ownership or affiliated by corporate control. For example, if ABC Holding Company owns ABC Bank, ABC Mortgage Company, and ABC Insurance Agency, the bank, mortgage company, insurance agency, and the holding company are affiliates.

Furnisher

An entity that furnishes information relating to consumers to one or more CRAs for inclusion in a consumer report. FCRA requires furnishers to investigate when consumers dispute the completeness or accuracy of information. Furnishers are also required to establish policies and procedures to ensure the accuracy and integrity of the information submitted to the CRAs. Banks, as furnishers of information to consumer reporting agencies, must comply with these FCRA requirements.

Investigative information

An investigative consumer report is a special type of consumer report containing information about a consumer's character, general reputation, personal characteristics, and mode of living obtained through personal interviews. Occasionally, a bank may obtain an investigative report on a borrower applying for a particularly risky or high-dollar loan or on a person being considered for a high-level position.

Who gets FCRA adverse action notices?

Any consumer who is the subject of the report used must receive an adverse action notice. The credit score information, if required, must only be sent to the person who is the subject of the credit score—credit scores are considered private, even among co-applicants and co-account holders. Guarantors and co-signers do not have to get adverse action notices, as they are not applying for or obtaining credit and therefore, do not suffer adverse action. Business principals must receive an adverse action notice with regard to a business application when the bank uses a consumer report pertaining to the principal. Credit score information should only be sent to the person who is the subject of the credit score.

Exemption from Risk based Pricing notice

Application for specific term click to expand contents Adverse action notice click to expand contents Prescreened solicitations click to expand contents Unavailable credit score

4. Susan Days opt-out has expired. Her banks affiliate may not use her information unless she receives a new notice and opportunity to opt-out for an additional period of at least five years. Who must provide this renewal notice? A. The Consumer Reporting Agency B. The affiliate providing the initial opt-out notice, or its successor C. The bank holding company D. The consumer's personal banker

B

When banks do not have to investigate disputes?

Banks do not have to investigate all disputes. For example, they do not have to investigate frivolous or irrelevant disputes, including duplicate claims that have already been investigated, disputes related to identifying information, inquiries or requests for a consumer report, the identity of past or present employers, or information related to fraud alerts. Furnishers also need not investigate if they have a reasonable belief that a credit reporting agency has been involved in submitting the dispute. In direct disputes banks as furnishers have certain requirements that limit the content and location of the disputes they will consider for review.

Adverse action based on information from third parties and affiliates that are not consumer reporting agencies

Banks may use resources other than consumer reporting agencies to make credit decisions about consumers to obtain the following information about them: Creditworthiness Credit standing Credit capacity Character General reputation Personal characteristics Mode of living

banks and other employers using consumer reports must comply with the FCRA and consider the key requirements.

Before getting a consumer report about an employee or prospective employee, the bank must disclose to the person in writing that the bank intends to get the report and then get the person's written consent. This is different from a credit application, in which case banks may obtain a credit report without the consumer's specific consent. If the consumer report reveals something that may cause the bank not to hire the person, the bank must notify the person of the results of the report and provide the person with a copy. The bank must give the person enough time to review the report, so the individual can challenge elements that may be incorrect. If the bank ultimately decides not to hire someone based in whole (or in part), due to the contents of a consumer report, it must provide an adverse action notice to that person that states the person was not hired, at least in part, due to the results of the consumer report.

An example of when the FCRA allows certain information to be shared with affiliates without providing the opt-out right is best described by which type of information? A. Information from the consumer's application for credit concerning the customer's assets and liabilities B. Information concerning the consumer's credit score and reasons for the score C. Information concerning the loan or checking account history of the customer with the bank D. Information from the consumer's credit report regarding past due payments

C

Community Bank & Trust wants to share its customer's transaction and account information with its insurance affiliate under two circumstances: (1) so the affiliate may market its products and services to Community Bank's customers, and (2) in response to the affiliate's request for loan transaction information due to a consumer's application for auto or homeowner's insurance. Which statement is true regarding this proposal? A. Neither reason is permissible according to the provisions of the Fair Credit Reporting Act Incorrect B. Only reason 2 is permissible according to the provisions of the Fair Credit Reporting Act C. Only reason 1 is permissible according to the provisions of the Fair Credit Reporting Act D. Both reasons are permissible according to the provisions of the Fair Credit Reporting Act

C

Permissible purpos

CRAs may only provide consumer reports if the user has a "permissible purpose," as described in the statute, to obtain the report. Permissible purposes include intentions to use the report in connection with employment, a credit transaction, other business transactions initiated by the consumer, or review of an existing account. It may not be used to satisfy curiosity or (with some exceptions) for marketing.

Generally, the credit score notice, risk-based pricing notice, and any other notices must be:

Clear and conspicuous Segregated from other information provided to the consumer In writing and in a form that the consumer may keep

The creditor must provide a risk-based pricing notice after the terms of credit have been set but before the consumer becomes contractually obligated on the credit transaction. Timing for all notices varies depending on the type of credit.

Closed-end credit - Before consummation of the transaction, but not earlier than the time the approval decision is communicated to the consumer. Open-end credit - Before the first transaction is made, but not earlier than the time the approval decision is communicated to the consumer. Indirect auto lending - Creditors may rely on an auto dealer to provide a notice to the consumer on the creditor's behalf within the required time periods. Creditors must maintain reasonable policies and procedures to verify that the auto dealer provides the notice within the applicable time period. Instant credit purchases - The earlier of either the time of the first mailing after approval or within 30 days after approval. This only applies when the instant credit is granted in person or on the telephone. It does not apply to online purchases. Account credit reviews - At the time the bank communicates the decision to increase the APR. Credit score notice - f the creditor chooses to provide a credit score notice in lieu of a risk-based pricing notice, the creditor must provide a notice to the consumer as soon as reasonably practicable after requesting the consumer's credit score, but not later than consummation for closed-end credit or when the first transaction is made for open-end credit. No credit score notice - The creditor must provide a no credit score notice as soon as reasonably practicable after the creditor has requested the credit score, but not later than consummation for closed-end credit or when the first transaction is made for an open-end credit plan.

Contents coverage

Contents coverage is also required when: 1) the contents of the property are taken as collateral; 2) the bank also takes the building where the contents are located as collateral; and 3) the building is located in a special flood hazard area. There are loan situations when, based on safety and soundness considerations, a bank may consider requiring the borrower to obtain additional private insurance—that is, a policy not issued or guaranteed through FEMA.

What statements must be included in the risk based pricing notice?

Credit History click to expand contents Terms Offered click to expand contents Less Favorable Terms click to expand contents Consumer's right to Obtain Copy of Report click to expand contents Right to Dispute Inaccurate Information Note - the notice must identify each consumer reporting agency that furnished a consumer report used in the credit decision and the consumer reporting agency's contact information. The notice must also explain how to obtain a consumer report from such consumer reporting agency or agencies and direct consumers to the web sites of the Bureau of Consumer Financial Protection and Federal Trade Commission for more information about consumer reports.

The FDPA requires banks to take the following actions:

Determine whether the building or mobile home securing a consumer or commercial loan is in a high-risk flood zone Notify the borrower if flood insurance is available under the NFIP and whether it will be required

Investigative Consumer Report notice

Employers who use investigative consumer reports—those based on personal interviews with neighbors, friends, and associates of the person—include the following additional obligations under the FCRA: Employers must provide written notice that the bank has requested or will request an investigative consumer report Employers must provide a notice of the right to request additional disclosures and a summary of the scope and substance of the report

How to determine if a risk based pricing notice is required?

FCRA generally requires creditors to provide a risk-based pricing notice to consumers whose credit terms are "materially less favorable" The statutory meaning of "materially less favorable" is somewhat complicated and vague, therefore the FCRA regulation sets out several options for creditors to determine when a risk-based notice must be sent due to this requirement.. 1 - Specific determination of similar types of transactions Creditors make the determination by directly comparing the material terms offered to each consumer and the material terms offered to other consumers in similar types of transactions. 2 - Credit score proxy method Creditors determine the credit score that represents the point at which approximately 60 percent of its "consumers" have lower credit scores and provides notices to those below the 60 percent threshold. The regulation offers several options for determining the cut-off score. 3 - Tiered pricing method Creditors that set terms within "one of a discrete number of pricing tiers" send notices to each consumer who does not qualify for the top tier or tiers i.e., the lowest APR tier. Special rules apply to creditors using the tiered rate pricing option. Who must receive the notice will depend on the number of tiers and other factors.

Lender requirements for Private flood insurance

Lenders are required to accept private flood insurance policies as satisfaction of the mandatory purchase requirement if the coverage provided by the private flood insurance satisfies certain specified standards. Additionally, regulated lenders are required to disclose to borrowers the following information: Flood insurance under the NFIP is available from private insurance companies or from the NFIP directly Flood insurance that provides the same level of coverage as an NFIP policy may be available from private insurance companies Borrowers are encouraged to compare policies

Flood insurance on detached structures

Flood insurance is not required on any structure on a residential property if it is detached from the primary residential structure and does not serve as a residence. * bank can often determine when flood insurance is required. When detached structures are given as collateral, lenders, and servicers may require the structure be covered regardless. In this instance, the structures themselves—such as detached greenhouses—have value to the bank and the borrower, and accordingly do not meet the purpose of the exemption. The detached structure exemption applies to loans made for business, commercial, or agricultural purposes if they are secured by a residence and part of the residence includes detached structures which meet the requirements of the exemption.

Some sharing allowed by the FCRA is prohibited under other laws—and vice versa.

For example, the term "consumer report'' does not include a report containing information solely related to transactions or experiences between the consumer and the financial institution making the report. Thus, banks may share information related to their own transactions or experiences with a consumer with any third party, without regard to affiliation, and without becoming a consumer reporting agency. However, this type of information sharing may be restricted under the regulations that implement the consumer financial privacy provisions of the Gramm-Leach-Bliley Act (GLBA). The GLBA privacy regulations, including the Bureau of Consumer Financial Protection's Regulation P, require that institutions give consumers the right to opt-out of allowing nonpublic personal information to be shared with non-affiliated third parties.

Combined privacy and FCRA affiliate sharing notices The model forms of the GLBA privacy regulations combine the following notices:

GLBA opt-out notice—sharing of nonpublic personal information with non-affiliates FCRA opt-out notice—sharing information "other than" transactions and experiences with affiliates The GLBA privacy notice must be provided annually—unless the privacy practices are unchanged and the institution does not share information with non-affiliates. If the institution is not required to send the annual GLBA privacy notice, but changes its FCRA sharing practices so that an FCRA opt-out is required, it must provide a notice of that change.

Information from third parties

If the bank denies a consumer credit application or increases charges on credit in whole or in part based on information from a third party that is not a consumer reporting agency or an affiliate, upon the consumer's written request for the reasons for the adverse action, the bank must disclose the nature of the information provided by such third party. The consumer has 60 days from the time it receives an adverse action notice (e.g., pursuant to the Equal Credit Opportunity Act) to make the request. While it is a bit confusing, the bank need not provide an FCRA adverse action when it takes adverse action based on information from a third party. That does not mean the consumer does not receive an adverse action notice. The Equal Credit Opportunity Act adverse action notice provides that information and explains how the consumer can obtain the third-party information used to make the adverse decision.

What if insurance is not available?

If the community is not participating and insurance is not available for the property, it is the bank's decision whether or not to make the loan or whether or not to require private flood insurance. Safety and soundness concerns should be evaluated to determine if it would be too risky to make the loan without flood insurance. When this happens, the bank must notify the borrower that the improved real property securing the loan is in a special flood hazard area, that the community is not participating in the NFIP, and that federally subsidized flood insurance is not available. However, the bank may, at its discretion, require the borrower to purchase private flood insurance.

Standard Flood Hazard Determination Form (SFHDF)

Lenders are required to use this form when determining whether a building or mobile home offered as collateral security for any federally regulated or insured loan is or will be located in a special flood hazard area in which flood insurance is available. The Standard Flood Hazard Determination Form may be used in a printed, computerized, or electronic manner.

Sharing other information

Inform is allowed to be shared with affiliates only under the following conditions:It is clearly and conspicuously disclosed to the consumer that the information will be communicated among such entities. Before the information is initially communicated, the consumer is given the opportunity to opt-out of the communication. This allows bank to not be considered credit reporting agencies.

Information other than transaction experience

Information "other" than transaction and experience information may not be shared with others, except affiliates; and then only if the customer has received the opt-out notice and not opted out.

Transaction and experience information

Information related to transactions and experiences between the consumer and the institution information ("transaction and experience" information) may be shared with affiliates and others without notice of opt-out.

Information shared with affiliates

Information shared with affiliates, regardless of the type of information, cannot be used for marketing purposes without providing the consumer with an opt-out notice.

What is the mandatory purchase requirement?

Means that before a bank can make, increase, renew or extend (some bankers use the acronym "MIRE"—often referred to as a MIRE event—to remember these four triggers for flood insurance coverage) any loan secured by certain improved real estate (including mobile homes) the bank must perform the following tasks: 1. Determine whether the building or mobile home property is located in a special flood hazard area (SFHA) in a community that participates in the NFIP 2. Notify the property owner of this fact and of the owner's obligation to purchase flood insurance 3. Ensure that sufficient flood insurance is maintained throughout the life of the loan

When the FCRA requirements do not apply?

Not all information obtained from third parties that is the basis for an adverse decision is subject to the FCRA. For example, a bank might decline a home equity loan based on an appraisal from a third party that indicates the home's value is insufficient to support the loan amount requested. In this case, no FCRA adverse action notice is required because the information, although obtained from a third party, is not related to the applicant's creditworthiness, credit standing, credit capacity, general reputation, personal characteristics, or mode of living. While the Equal Credit Opportunity Act requires an adverse action notice, that notice is different from the FCRA adverse action notice in that it explains only the reason for the bank's denial.

Under the FCRA, consumers must receive the following notices:

Notice explaining their right to opt-out of having information "other than" transaction and experience information shared with affiliates Notice that they may opt-out of having any of their information used by affiliates for marketing purposes In addition, financial institutions may coordinate and consolidate the notices along with others, such as privacy notices.

Notice of Negative Information reporting

Notice of negative information reporting A bank that furnishes negative information to nationwide CRAs about consumer credit must provide a clear and conspicuous written notice to the consumer indicating that it furnishes negative information to CRAs. A bank must provide the notice prior to or no later than 30 days after furnishing the negative information. A bank may provide negative information when the account is opened, but it may not be included on the Truth in Lending Act (Regulation Z) disclosures. Two model forms ("Furnishing Negative Information") are available in Appendix B of Regulation V (which implements certain provisions of FCRA).

Are notices required for credit reviews?

Notices are required for existing credit accounts if the APR increases based on the creditor's periodic review of the account.

Are notices required for an Application of credit?

Notices are required when the lender offers credit terms to a consumer that are materially less favorable than terms available to a substantial proportion of that creditor's customers. For example, when a bank offers a customer a higher Annual Percentage Rate (APR) based on information in a consumer report, a risk-based pricing notice is required.

If flood insurance is available, the FDPA requires the bank to do the following tasks:

Obtain proof of insurance prior to closing the loan Ensure an adequate amount of insurance remains in force for the life of the loan

Besides providing accurate information, investigating complaints, and establishing policies for compliance, furnishers have several other duties.

Provide accurate information Implement reasonable written policies and procedures Correct and update information Provide notice when the information is in dispute Provide notice of closed accounts Provide notice of delinquency of accounts

Before using a report for employment purposes what must the bank do to uses the report?

Provide the consumer a clear and conspicuous written disclosure stating that a consumer report may be obtained Obtain written authorization from the consumer Certify to the consumer reporting agency providing the report that The above steps have been followed The information being obtained will not be used in violation of any federal or state equal opportunity law or regulation Before taking adverse action based on the consumer report, the user will provide the consumer a copy of the report and a summary of the consumer's rights With regard to the last point, a copy of the report and a summary of the consumer's rights prior to taking adverse action allow consumers to dispute incorrect findings before they are turned down for a job or denied a promotion based on inaccurate information.

Purchase requirements of insurance

Purchase requirements apply to loans secured by improved real property located in a special flood hazard area in a community that participates in the NFIP and insurance is available ("designated loan"). All areas that have been mapped by FEMA for flood status have a designated zone. Properties in a special flood hazard area are clearly marked on the SFHDF.

What 3 (three) notices are required to provide to the consumer under the risk based pricing rule?

Risk-based pricing notice Credit score notice No credit scores available notice

Information from affiliates

Similar but slightly different rules apply when the bank uses certain information from affiliates to make consumer credit decisions. Adverse action notice is not required if the information the affiliate provides is limited to the affiliate's experience and transactions with the consumer. If the bank relies on information from an affiliate that is not the affiliate's experience and transaction information, it must notify the consumer of the action taken and the consumer's right to obtain the nature of the information upon which the action is based. (The FCRA does not require disclosure of the right to obtain the reasons for the action in this case, although the Equal Credit Opportunity Act separately requires such a disclosure.) The consumer must make the request within 60 days of receiving the notice. The bank has 30 days to respond.

The FCRA requires banks to notify consumers if the bank takes adverse action that is based in whole or in part on information contained in a consumer report. This requirement applies when a bank decides not to hire or not to promote an individual based on such information—including information in an investigative consumer report.

Step One - First, before taking adverse employment action, the bank must give the following information to the applicant or employee: A notice that includes a copy of the consumer report the bank relied on to make its decision. By providing the notice in advance, the applicant or employee has an opportunity to review the report and explain or refute any negative information A copy of "A Summary of Your Rights Under the Fair Credit Reporting Act," which the bank should have received from the agency providing the report Effective September 21, 2018, the Bureau of Consumer Financial Protection requires that employers must include a security freeze notice when the applicant's credit report is to be used in making a hiring decision. Step Two - Second, after the bank takes an adverse employment action, the bank must inform the following information to the applicant or employee—orally or in writing (which may be electronic): - The employee or applicant was rejected because of information in the report - The name, address, and phone number of the agency that provided the report - The company selling the report did not make the hiring decision and cannot give specific reasons for it - The employee or applicant has a right to dispute the accuracy or completeness of the report and - to get an additional free report from the reporting company within 60 days

When is the ECOA notice issued?

The ECOA notice is required for any adverse credit decision, whether or not the consumer report impacted the decision. In addition, the ECOA notice must include the reasons for the adverse action or a notice of the customer's right to know those reasons. The bank need only provide one ECOA adverse action notice when there are multiple applicants.

Adverse Action requirements for ECOA (Reg B)

The Equal Credit Opportunity Act (ECOA), as implemented by Regulation B, also has a requirement to notify credit applicants if the creditor denies their credit application or takes other adverse action. However, unlike the FCRA adverse action notice, the ECOA notice must include the reasons for the adverse action or an explanation of the applicant's right to a statement of specific reasons.

Is the adverse action separate from other disclosures?

The FCRA adverse action notice is separate from the adverse action notice required under the Equal Credit Opportunity Act (ECOA) and Regulation B, although they are often sent in a combined notice.

FCRA is a broader than a credit report?

The FCRA gives consumers who are the subject of investigative reports special rights. If a bank intends to obtain an investigative consumer report, it must disclose to the consumer that an investigative consumer report may be obtained.

When is the FCRA notice required?

The FCRA notice is required if a consumer report (including a credit score) influences the adverse decision. Finally, the bank must provide the FCRA notice to each applicant whose consumer report was used whereas it need only provide one ECOA adverse action notice when there are multiple applicants.

What are the requirements for the Notice of opt-out for prescreening?

The FCRA requires that offers of credit or insurance based on a prescreened list advise recipients of their right to contact the consumer reporting agency and opt-out of receiving prescreened offers. This notice alerts consumers that they are receiving the offer because they meet certain criteria. The notice must also provide the consumer reporting agencies' toll-free telephone number to opt-out.

Provision in Biggert-Waters

The Final Rule also defines the "as broad as" provision in Biggert-Waters. The Final Rule defines private policies which are "as broad as" an NFIP policy to mean that the private policy meets the following criteria: Defines a "flood" to include the same events as a SFIP Has the same types of coverage available as an SFIP Has deductibles which are no higher than SFIP deductibles for policy amounts up to NFIP maximums Only excludes losses that are excluded in an SFIP, except those that apply to coverage that is beyond what is provided by an SFIP Does not contain conditions which narrow the coverage that would be provided in an SFIP

Discretionary acceptance

The Final Rule retains the ability of lenders to accept or reject private flood policies which do not meet the statutory definition. The Final Rule permits the discretionary acceptance of a commercial or residential private policy that: Provides coverage in the amount required, which must be at least equal to the lesser of the outstanding principal balance of the designated loan or the maximum limit of coverage available for the particular type of property under the FDPA Is issued by an insurer that is licensed, admitted, or otherwise approved to do business where the property is located; or for non-residential commercial property, is issued by a surplus lines insurer recognized or not disapproved where the property is located Covers both the mortgagor(s) and the mortgagee(s) as loss payees, except in the case of a policy that is provided by a condominium association, cooperative, homeowners association, or other applicable group and for which the premium is paid by the condominium association, cooperative, homeowners association, or other applicable group as a common expense Provides sufficient protection of the designated loan, consistent with general safety and soundness principles, and the institution documents its conclusion regarding sufficiency of the protection of the loan in writing

What does the NFIP cover?

The NFIP provides up to a predetermined amount of fed subsidized flood insurance to owners of improved real estate located in designated flood hazard areas within participating communities. The community can choose to participate in the NFIP. If the community participates, then flood insurance will be available to property owners in that community. The FDPA applies to all federally-regulated lending institutions and includes all banks. The FDPA covers any designated loan, defined as a loan secured by a building or mobile home that is located or to be located in a special flood hazard area in which flood insurance is available under the NFIP.

Ms. Franklin has applied for a loan secured by her new primary residence on a beautiful Florida beach which puts her home in a designed flood zone. The insurable value of the primary residence is $300,000 and the amount of the loan will be $285,000. What is the minimum amount of flood insurance that your bank must require to consummate the transaction? A. $300,000 B. $285,000 C. $250,000 D. $200,000

The correct answer is c. A, B, and D are incorrect because the minimum flood insurance amount required is the lesser of the outstanding principal balance of the loan, the insurable value, or the maximum amount of coverage available under the NFIP for the particular type of building.

What must the bank do when a consumer submits a dispute?

The bank must conduct a reasonable investigation, review all relevant information the consumer provides, and complete its investigation generally within 30 days, (though it may have an additional 15 days in some cases.) If it finds that the information in dispute is inaccurate, it must promptly notify each CRA to which it had provided inaccurate information and provide any necessary corrections. If it cannot verify the accuracy or inaccuracy of disputed information, it must delete the information and permanently block the reporting of that information.

When does the bank need to make a flood determination?

The bank must make a flood determination anytime it makes, increases, renews, or extends a loan that is secured or to be secured by improved real property. This process involves providing the property description to a person or vendor that has current flood maps published by the NFIP. The FDPA requires the person or vendor the bank relies upon to perform this task to guarantee the accuracy of the information it provides the bank.

There are several exceptions to this risk-based pricing notice requirement. Among them is the credit score notice exception. Which situation would require that consumers receive a credit score notice? A. All consumers whose credit price or term was based on a consumer report B. All consumers who receive a risk-based pricing notice C. All consumers who do not have a credit score D. All consumers even if the bank did not price based on risk

The correct answer is a. B is incorrect because lenders need not provide both a risk-based pricing notice and a credit score notice. C is incorrect because consumer with no credit score receives a notice that states that they have no score. D is incorrect because if a lender does not price based on risk, no notice is required.

Your bank is making a designated loan and you have been assigned the task of calculating the insurable value to recommend the amount of flood insurance to require. Which method below is acceptable when calculating the amount of insurance to require when establishing the insurable value? A. You may use an appraisal based on a market-value approach B. You may use the exact amount of the insurable value used in the hazard insurance policy C. You may use a construction-cost calculation approach D. You may use the replacement cost value including the value of the land

The correct answer is c. A is incorrect because you may use an appraisal based on a cost-value, not market-value approach. B is incorrect because the insurable value for flood insurance purposes may differ from the coverage provided by the hazard insurance and adjustments may be necessary to include, for example, foundation coverage not normally provided for under a hazard insurance policy. D is incorrect because the replacement cost value for flood insurance purposes excludes the land.

Which provision below meets part of the statutory definition of a private flood insurance policy? A. Provision that the insurance company is licensed in the state where the insurance company is located B. Provision that the deductibles are higher than under the NFIP C. Provision that the insured will be given written notice 90 days before cancellation of flood insurance coverage D. Provision that coverage conditions are not narrower than coverage provided in a SFIP

The correct answer is d. D is correct. A is incorrect because the insurance company must be licensed, admitted, or otherwise approved to engage in the business of insurance by the insurance regulator of the state or jurisdiction in which the property to be insured is located, not the state where the insurance company is located. B is incorrect because the deductibles may not be higher than the specified maximum. C is incorrect because the insured and the lender must be given 45 days written notice before cancellation or non-renewal of flood insurance.

The FCRA prohibits an affiliate from using customer information of another affiliate for marketing to that customer unless certain conditions are met. What conditions must be met before information from an affiliate can be used for marketing purposes?

The following three conditions must be met: The right to opt-out of allowing an affiliate to use customer information for marketing purposes must be clearly and conspicuously disclosed to the consumer in writing. The notice must be concise and state that the bank or an affiliate of the bank may use information received from an affiliate about that consumer to make solicitations for marketing purposes to the consumer The consumer must be provided with a reasonable opportunity and a reasonable and simple method to opt-out or prohibit the use of the eligibility information to make solicitations for marketing purposes to the consumer The consumer must not have elected to opt-out

What must the CRA do when a consumer submits a dispute?

The furnishers' responsibilities when the dispute comes through the CRA are similar to the disputes submitted directly to the bank. If a CRA notifies a bank (furnisher) that a consumer disputes information the bank provided, it must conduct the following actions: Investigate the dispute and review all relevant information provided by the CRA about the dispute Report its findings to the CRA Provide corrected information to every CRA that received the information if its investigation shows the information is incomplete or inaccurate Modify the information, delete it, or permanently block its reporting if the information turns out to be inaccurate or incomplete or cannot be verified The bank must complete these steps within the same time allowed under the FCRA for the CRA to resolve the dispute. Normally, this is 30 days after the CRA gets the dispute from the consumer. If the consumer provides additional relevant information during the 30‑day period, the CRA has 15 more days to resolve the dispute. The CRA must give the bank all the relevant information it gets within five business days of receipt and must promptly give the bank additional relevant information provided by the consumer. If the bank does not investigate and respond to the notification of the dispute within the specified times, the CRA must delete the disputed information from its files.

What conditions must be met before a bank may use eligibility information obtained from an affiliate for marketing purposes:

The right to opt-out of affiliates to use eligibility information for marketing purposes must be clearly and conspicuously disclosed to the consumer in writing. The notice must be concise and state that the bank may use information received from an affiliate, about that consumer, to make solicitations for marketing purpose The consumer must be provided a reasonable opportunity, and a reasonable and simple method, to opt-out or prohibit the use of the eligibility information to make solicitations. The consumer must not have elected to opt-out In sum, banks may share eligibility information—which includes transaction and experience information as well as "other" information—with affiliates, but the affiliate may only use that information for marketing purposes if the customer had the opportunity to opt-out and has not exercised that opt-out right.

Material term

The rule defines "material term" as the loan's APR, (except teaser rates, penalty rates, and fixed rate option on home equity lines of credit). For credit cards, it is the APR applied to purchases. For credit for which there is no interest charged, the material term is the financial term that has the most significant financial impact on consumers (e.g., an annual fee on a charge card).

Exemption from credit score notice

There are several instances when creditors can be exempt from sending a risk-based pricing notice. The credit score notice is one of them. In lieu of providing a risk-based pricing notice, creditors may choose to provide a credit score notice to all consumers, regardless of the loan terms. This notice contains the consumer's credit score and other information including explanations of how the creditor uses credit score information to set the credit terms and how the consumer may obtain a free credit report. The credit score notice must be sent based under the following circumstances: The notice must be sent to all consumers whose credit price or term was based on a consumer report The notice must be sent to a consumer requesting an extension of credit for a product for which the bank uses risk-based pricing, including those who would not receive a risk-based pricing notice

If CBA Bank uses risk-based pricing for every loan product it offers. What type of notice needs to be sent?

This bank has chosen to use the credit score notice and must therefore send the notice to all applicants for credit unless one of the other exceptions applies.

What does the "risk based pricing notice" cover?

This regulation applies primarily for credit for personal, family or household purposes. It does not apply to leases or business credit.

The FCRA contains several exceptions to the definition of consumer report that allows parties, such as banks, to communicate this type of information, with limits and conditions, without becoming a consumer reporting agency. Under the FCRA, to avoid being a consumer reporting agency, certain information may be shared with affiliates only if the customer is provided a notice of the right to "opt-out"— Other information may be shared without providing the opt-out right.

Transaction and experience information Information other than transaction experience Information shared with affiliates

When can a application be denied after a post-screening?

Underage Applicant moved out of set geographic area of the established criteria *post-screen rejection is adverse action subject to the adverse action notice requirements of the FCRA and the Equal Credit Opportunity Act.

When can a lender rely on a previous determination?

When the loan involves a refinancing or assumption by the same lender who obtained the original flood determination on the same property, the lender may rely on the previous determination only if the original determination was made not more than seven years before the date of the transaction, the basis for the determination was set forth on the SFHDF, and there were no map revisions or updates affecting the security property since the original determination was made. If the same lender makes multiple loans to the same borrower secured by the same improved real estate, the lender may rely on its previous determination if the original determination was made not more than seven years before the date of the transaction, the basis for the determination was set forth on the SFHDF, and there were no map revisions or updates affecting the security property since the original determination was made.

Notice of opt-out

a choice to not share information with affiliates—and does not exercise that right.

Mutual aid societies

allows lenders to accept flood insurance policies written by mutual aid societies in satisfaction of the mandatory purchase requirement. Mutual aid societies are defined as organizations that meet all the following criteria: Members share a common religious, charitable, educational, or fraternal bond Pursuant to an agreement, the organization covers losses caused by damage to members' property including damage caused by flooding, in accordance with this common bond The organization has a "demonstrated history" of fulfilling the terms of agreements to cover losses to members' property caused by flooding Institutions may accept plans offered by mutual aid societies to fulfill the mandatory purchase requirement

Prescreening process

obtain a list of consumers from a consumer reporting agency that meets the institution's pre-established criteria. Criteria - identify the criteria for selection and then, if not opted out the offer is considered firm may do limited postscreening with regard to eligibility after a person on the list responds to the offer may not use a prescreened list solely to send promotional material

Calculating the amount of flood insurance to require

choose from a variety of approaches or methods to establish the insurable value. They may use an appraisal based on a cost-value (not market-value) approach, a construction-cost calculation, the insurable value used in a hazard insurance policy (recognizing that the insurable value for flood insurance purposes may differ from the coverage provided by the hazard insurance and that adjustments may be necessary; for example, most hazard policies do not cover foundations), or any other reasonable approach, so long as it can be supported. Outstanding Principle: What is left on the balance or the max coverage provided by the NFIP Insurable value: Currently, $250,000 is the maximum limit of flood insurance coverage available under the National Flood Insurance Program (NFIP) for residential structures and $500,000 for commercial structures. Contents coverage has a maximum limit of $100,000 for residential structure contents and $500,000 for commercial structure contents.

Can transaction and experience information may be shared with affiliates?

consumers have no right to opt-out of sharing this information. Transaction and experience information include, for example, the loan or checking account history of the customer with the bank.

What are the key components of the prescreening process?

establishing criteria, obtaining a list of consumers, making a firm offer, and postscreening.

Which loan application falls into the FCRA exception and does not require a creditor to send a risk-based notice or a credit score notice? A. An application for overdraft protection line of credit from Jimmy, who has no credit score B. An application for a new car loan for Martie whose APR will be higher based on a low credit score Incorrect C. An application for a 30-year mortgage from Lester who received the 609(g) notice D. An application for Dan, who will receive the rate he requested

he correct answer is a. B is incorrect because this would require a risk-based pricing notice. C is incorrect because the 609(g) notice to Home Loan Applicant still requires the lender to provide a risk-based pricing notices if a consumer receives less favorable terms based on information in a credit report. D is incorrect because, if the lender gives the rate requested by the consumer, notice is not required.

What is the purpose of the Flood Insurance Program (NFIP)?

his program makes flood insurance available to flood-prone areas at a reasonable cost through a joint program involving the private insurance industry and the federal government.

Borrower notification of flood insurance

improved real property securing a loan is in a special flood hazard area, the bank must provide written notice to the borrower. The bank must notify the borrower that his or her property is in a special flood hazard area in sufficient time to allow the borrower to obtain flood insurance prior to loan closing. The Act requires this notice be provided within a "reasonable" amount of time before the loan closing. This notice is required whenever a bank makes, increases, renews, or extends any designated loan. That means that even if the bank modifies a loan that already has flood insurance in place, the bank must still provide this notice to the borrower(s).

FCRA - Consumer report

information bearing on the consumer's creditworthiness or general reputation that is used or is expected to be used or collected for the purpose of serving as a factor in establishing a consumer's eligibility for the following purposes: Credit or insurance for personal, family, or household purposes Employment Other purposes defined by the Act

"Other information"

information that is not transaction or experience information

FCRA use of marketing information is prohibited unless?

the consumer is advised of the intent to use the consumer's information for such purposes and is given the right to opt-out. The restriction on info from an affiliate for marketing purposes applies to any information shared—including transaction and experience information—that would be considered a consumer report (i.e., information bearing on a consumer's creditworthiness, credit standing, general reputation etc.,) except for the FCRA's exclusions of such information from the definition of consumer report. Such information is called "eligibility information."

require you to perform a flood determination

the requirement to perform a flood determination applies to loans that are or will be secured by a building or mobile home attached to real property. Ex. A loan to purchase a vacation home that will be secured by that home

True or false - when an employer—including a bank—uses information about an applicant or employee from a "consumer reporting agency" to make an employment decision, it must comply with the Fair Credit Reporting Act (FCRA).

true

Does the consumer have the right to opt-out of receiving prescreened offers

yes