Along with the Federal Equal Credit Opportunity Act (15 USCA §§1691 et seq.) and Regulation B (12 CFR §§1002 et seq.), several states have enacted their own laws which require a creditor to provide “adverse action” disclosures to credit applicants when such applicants’ application have been denied, terminated, or accepted on terms less favorable than those applied for.
12 CFR Pt. 1002, App. C provides sample notices which creditors may use to comply with Federal regulations; Sample Notice C-1 has been created into Cx15858 for use in DocuTech’s disclosure database.
Although Cx15858, without modification, fulfills most states’ adverse action disclosure requirements, there are some which require more information to be disclosed than required under Federal law and it has been necessary to provide addendums and supplements to Cx15858 to cover such requirements in some states, such as Arkansas, Connecticut, Maine, Massachusetts, and Rhode Island.
After a careful review of California’s adverse action laws, DocuTech will begin providing a supplement to Cx15858 for loans secured by property located in California, due to Cal. Civ. Code §1785.20(a)(4). This supplement will print in Cx15858, as a separate page from the C-1 Sample Form, and when the second checkbox in Part II of the Sample Form is checked. The supplement will disclose to the borrower(s) that, besides obtaining a copy of the credit report that the creditor used in making their adverse decision from the credit reporting agency that prepared the report, the borrower(s) may also obtain a copy of their credit report from any credit reporting agency that conducts reports on a nationwide basis, such as Experian, Equifax, and Transunion.
In addition, the phrases “Excessive obligations in relation to income” and “Value or type of collateral not sufficient” will no longer be displayed as subtitles under “Other, specify”. These hardcoded reasons will still check under Part I if their respective indicators are set to “Yes”.
These changes will take effect on May 9, 2012. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
May 8, 2012