715 HORIZON Lending Managing Your Credit Bureau Processesempower1.fisglobal.com/rs/650-KGE-239/images/715 HORIZON... · 2020. 9. 10. · Managing Your Credit Bureau Processes May

HORIZON Lending Managing Your Credit Bureau Processes

May 2017Paul Stokes, HORIZON Product Line Manager

Credit Bureau Reporting Within HORIZON

• What determines reporting?

– New account process.

– On going updates to report account flag.

• What’s our guide for determining proper reporting?

– The Consumer Data Industry Association’s (CDIA) 20xx Credit Reporting Resource Guide; that’s our ‘bible’. Updates

are done once a year, typically in an August – October timeframe.

• Today’s Topics:

– How does HORIZON update the credit bureau files?

– Loan Sales Servicing Released.

– Chargeoffs, full and partial.

– Foreclosures.

– Bankruptcies.

What Determines Reporting Within HORIZON?

First, start with the customer

record. You must check the

‘Credit Bureau’ option on the

Additional Info 1 link.

What Determines Reporting Within HORIZON?

Second, the Credit Bureau

reporting flag at the Account

Title level must be a ‘Y’.

Updates to the Credit Bureau Files: What do we do within HORIZON?

• Something to keep in mind before we get started:

• Master Loan/Tranches: we do not report the Tranches. All data is rolled up to the Master Loan level, and only the Master Loan is reported. That includes balances and delinquencies.

• SBA loans can be reported. Are you doing this today? NOTE: work with your bureaus to ensure they will take the file within our credit bureau files. Most work with Experian.

• 2016 IRB 004 generated the following changes/updates:

– Date of birth and social security number: all segments must be populated even if populated with all zeros

– Updates to original charge off amount and date values

– MERS ID population

– Updates for zero balance matured loans within the loan application

– Current account status for mortgages when a mortgage is charged off; populate with a value of ‘L’ and don’t override

– FCRA date updates, specifically related to bankruptcies

• 2016 IRB 007 changes/updates:

– Consumer Tran Type is no longer required and will no longer be populated

Updates to the Credit Bureau Files

• The date in the Date of First Delinquency field must be determined each reporting period based

on the following hierarchy:

– For Account Status Codes 61-65, 71, 78, 80, 82-84, 88-89 and 93-97, report the date of the first delinquency that led to

the status being reported. If a delinquent account becomes current, the Date of First Delinquency should be zero filled.

Then if the account goes delinquent again, the Date of First Delinquency starts over with the new first delinquency

date.

– For Account Status Codes 05 and 13, if the Payment Rating is 1, 2, 3, 4, 5, 6, G or L, report the date of the first

delinquency that led to the Payment Rating being reported.

– For Consumer Information Indicators A-H and Z (Bankruptcies), 1A (Personal Receivership) and V-Y (Reaffirmation of

Debt Rescinded with Bankruptcy Chapters), if the account is current (Account Status Code 11 or Account Status Code

05 or 13 with Payment Rating 0), report the date of the bankruptcy/personal receivership petition or notification. Even

though the account is not delinquent, this date is required for purging purposes. Note that Consumer Information

Indicators W, X & Y are obsolete as of September 2010 and may no longer be reported.

– If none of the conditions listed in the above hierarchy apply, the Date of First Delinquency should be zero filled.

Updates to the Credit Bureau Files

• Something to keep in mind before we get started:

• Codes we never override:

05 - Account Transferred to another office 93 – Seriously Past Due, assigned for collection

61 – Paid in Full, voluntary surrender 94 – Foreclosure, credit grantor sold collateral

62 – Paid in Full, collection acct, insurance claim 95 – Voluntary Surrender

63 – Paid in Full, repossession 96 – Merchandise taken back, balance may be due

64 – Paid in Full, charge off 97 – Unpaid balance reported as loss by credit

grantor

65 – Paid in Full, foreclosure started DA – Delete Account

88 – Claim filed with govt for insured portion of balance DF – Delete entire account due to confirmed fraud

89 – Deed received in lieu of foreclosure on defaulted mortgage

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Loan Sales Servicing Released

Loan Sales, Servicing Released

• There are two options for reporting accounts that are sold to another company.

• If the company that purchased the accounts will not report the prior history, the seller must

report the accounts as sold to reflect the final status. Report the following Base and K2 Segment

fields as specified:

– Scheduled Monthly Payment Amount = zero

– Account Status Code = the appropriate code that specifies the status of the account at the time of the sale

– Payment Rating = if applicable to the Account Status Code being reported

– Special Comment = AH (Purchased by another company)

– Current Balance and Amount Past Due = zero

– FCRA Compliance/Date of First Delinquency = if the account is delinquent at the time of sale, report the date of the

first delinquency


• There are two options for reporting accounts that are sold to another company.

• If the company that purchased the accounts will not report the prior history, the seller must

report the accounts as sold to reflect the final status. Report the following Base and K2 Segment

fields as specified:

– Date Closed = date the account was sold to the other company. If the account was closed prior to being sold, report

the original date the account was closed.

– K2 Segment Portfolio Indicator = 2 and Sold To Name = name of company to which the account was sold

• If the company that purchased the accounts is converting the account history to their system,

the seller should not report the accounts as sold.

• In this situation, the seller and purchaser should work together with the data representatives at

the consumer reporting agencies, who will assist you with conversion of the accounts.



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Charge Offs

Charge Offs

• Reference CDIA Guide Frequently Asked Question #34. How should charge off accounts be

reported?

– Account Status = 97 (note: if you have reported an 89, Deed in Lieu, you cannot then report a 97; same with a 94,

foreclosure complete)

– Scheduled Monthly Payment Amount = zero

– Current Balance and Amount past due are reported

– Original Charge off Amount – original amount charged to loss, do not change

– Date of First Delinquency – the date of first delinquency that led the account to being charged off

– Date Closed: For portfolio types ‘I’ and ‘M’ report zero. For line of credit accounts, if the account is closed, report the

date the account was closed to further purchases/advances. Otherwise zero.

– Date of Last Payment – report the most current payment date of the consumer.

Charge Offs

• How should paid charge off accounts be reported?

– Account status = 64

– Scheduled monthly payment amount = zero

– Special Comment Code = ‘AU’ if account is settled for less than the full balance

– Current balance and amount past due = zero

– Original charge off amount should be reported

– Date of account information = date paid

– Date of first delinquency – the date of the delinquency that led to the account being charged off

– Date closed – For portfolio types ‘I’ and ‘M’ the date the account was paid in full. For line of credit accounts report the

date the account was closed to further purchases/advances.

– Date of last payment – the date of the last consumer payment made

Partial Charge Offs

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• If the consumer is held responsible for the portion of the debt that is charged off, then:

– (Just a note: if the deficiency balance is being charged off for accounting purposes only, deduct the charged off amount

from the current balance of the ongoing account. DO NOT report the charged off balance separately)

– Report the original account with the appropriate account status for that month with a balance that does not include the

amount charged to loss.

– The charged off balance should be reported as a separate account with a new account number:

Date opened = original date opened

Original charge off amount = amount charged to loss

Date of first delinquency = date of the first delinquency that led up to the charge off

– If the original account is subsequently charged off both accounts would be reported as account status 97 but would

have different charge off amounts.

• Is anyone doing this?

Charge Offs - Loans

• Loans:

– If the Impaired Status of a loan = ‘C’ representing charge off, we set the status to a 97.

– If the account pays off and there is a charge off date we set the status to a 64.

– If the system type is >=2 and the account pays off we set the special condition code to ‘XA’.

– We don’t override these statuses.

– We set the original charge off amount one time only; we do not override even if updated on the loan. Prior to IRB 004

we used charge off amount; now we use original charge off amount; they can be different. If you update the amount

on the loan you need to update the amount on the credit bureau record as needed.

– When an account status = 97 we do set last reported status to ‘L’.

– Does a special comment code need to be reported?

If the account is paid off and settled for less than the full balance, report special comment code ‘AU’

You will need to manually update the special comment code!

Reference frequently asked questions 38 and 53 (related to short sales)

Charge Offs - Mortgage

• Mortgage:

– If the Impaired Status of a loan = ‘C’ we set the status to a 97.

– We do not automatically set a 64 if paid off. Manually set it today.

– If the loan type is a ‘5’ (Construction) and the account pays off manually set the special condition code to ‘XA’.

– We do set original charge off amount one time only. If you update this amount on the loan you need to then update the

amount on the credit bureau record as well as needed.

– We do set last reported status to ‘L’.

– Does a special comment code need to be reported?

If the account is paid off and settled for less than the full balance, report special comment code ‘AU’

You will need to manually update the special comment code!

Reference frequently asked questions 38 and 53 (related to short sales)

– How long will a charged off account be reported?

– When do you report a 1099-C for a charge off?

Charge Offs

• How long will a charged off account be reported?

– A charge off account continues to report until you tell the system to not report the account.

– A paid off charge off loan reports one last time.

• When do you report a 1099-C for a charge off?

– A 1099-C is issued when “any applicable entity…discharges an indebtedness of any person…of at least $600 during a

calendar year.” See generally 26 U.S.C. @ 6050P (2012); 26 C.F.R. @ 1.6050P-1 (2013).

– The Internal Revenue Code lists nine factors that trigger the issuance of 1099-C. This includes the expiration of the

statue of limitations to collect on a breach of contract; the decision or policy to discontinue collection; and the

expiration of the 36 month non-payment testing period.

• Consult your legal council for best practices in your area!

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Foreclosures

Foreclosures

• Reference CDIA Guide Questions 52 and 53

• Potential foreclosure: no special reporting; continue reporting appropriate account status code such as ‘82’ past due 120 – 149 days.

• Foreclosure started: Special comment code ‘BO’ should be reported, and continue to be reported as long as the comment applies. Report appropriate status code.

• Foreclosure canceled: remove the special comment code.

• Foreclosure started/now paid: report account status 65 (account paid in full, a foreclosure was started). Report the appropriate payment rating. Same with redeemed foreclosure.

• Foreclosure completed: report account status 94 (foreclosure completed, there may be a balance due). Stop reporting special comment code ‘BO’ and report the appropriate payment rating.

– If the consumer is not responsible for the remaining balance, the current balance should be reported as zero and report the date closed as the date the foreclosure was completed.

– If the consumer is responsible for the remaining balance continue report account status 94, continue reporting the current balance, declining as payments are made. When the balance reaches zero report the date closed as the date the account was paid in full.

• For credit reporting purposes do not report account status 97 (charge off) after account status 94 has been reported.

Foreclosures

• Alternatives to Foreclosure:

– Deed in Lieu: report account status 89, deed received in lieu of foreclosure, there may be a balance due. As with

foreclosure completed, continue reporting 89 if the consumer is held responsible until paid. Date closed is the date

paid in full. One quirk, if consumer is responsible the payment history profile should be blank in subsequent months

after first reporting the status 89. And again, do not report status 97 after reporting status 89.

– Short sale:

The account status will be either a 13 or 65.

Special comment code should be ‘AU’ account paid in full for less than the full balance.

Scheduled monthly payment amount should be zero

Current balance and amount past due should be zero, date of account information and date closed should be the date the

account was paid in full for less than the full balance.

Foreclosures

• Mortgage:

– If you code an account with a special function code of ‘FSTIP’ or ‘FOREC’, or set the foreclosure flag (not

recommended) to a ‘Y’ we will set the special comment code to a ‘BO’.

– We’ll remove the special comment if the codes are removed from the loan.

– If the status is ‘65’ we will populate the 24 month indicators with a value of ‘H’

– Other processes are manual

• Loans:

– All processes are manual

• Global:

– Status codes 65, 89 and 94 will not be over-written by other calculated statuses.

• Is there any recommended tracking within HORIZON that you should do?

Foreclosures

Foreclosure tracking can be

accomplished from the Loss

Mitigation option related to

Foreclosures.

Access this from ML delinquency

option, or Collections for either LN or

ML.

25

Bankruptcy

Bankruptcies

• First, the CDIA guide has 10 Frequently asked questions related to bankruptcy, numbers 23

through 32.

• The question range from how an account should be reported when the consumer files for

bankruptcy but the account is not included in the bankruptcy, to…

• Different reporting processes for Chapters 7, 11, 12 versus Chapter 13 to…

• Accounts having filers and non-filers of bankruptcy to…

• Reaffirmations, multiple bankruptcies, payments while in bankruptcy, discharges and

terminations.

• The key is the reporting of the Consumer Information Indicator value.

• What are the frequently asked questions?

Bankruptcies

• 23. How should an account be reported when the consumer files bankruptcy, but the account is

not included in the bankruptcy?

• 24. How should an account included in bankruptcy be reported if a “Relief from Stay” is granted

to the creditor?

• 25. How should an account that has been included in Bankruptcy be reported when a consumer

is making payments or has paid the account in full, even though the account has not been

reaffirmed?

• 26. Is there a preferred method of reporting when accounts are completely or partially reaffirmed

in bankruptcy?

• 27. Accounts included in Bankruptcy Chapter 7 or 11: (a) How should an account be reported

when all borrowers associated to the account filed Bankruptcy Chapter 7 or 11? (b) How should

an account be reported when one borrower filed Bankruptcy Chapter 7 or 11 and the other

borrower did not?

Bankruptcies

• 28. Accounts included in Bankruptcy Chapter 12 or 13: (a) How should an account be reported

when all borrowers associated to the account filed Bankruptcy Chapter 12 or 13? (b) How should

an account be reported when one borrower filed Bankruptcy Chapter 12 or 13 and the other

borrower did not?

• 29. How should a secured debt (e.g., mortgage account) be reported when a consumer

completes the required payments through a Bankruptcy Chapter 12 or 13 plan, but the account

is still open and the consumer is continuing to make payments?

• 30. How should multiple bankruptcies (i.e., the same or different chapters) be reported for the

different associated borrowers on an account?

• 31. How should bankruptcies be reported when the consumer voluntarily surrenders the

merchandise or redeems the merchandise?

• 32. How should an account be reported when a Bankruptcy case has been closed or terminated

without being discharged or dismissed?

Bankruptcies

There are many values associated

to the consumer info ind flag.

What are they?

Bankruptcies

Bankruptcies

FYI, values W,X and Y are

no longer valid.

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So, First, When Does a Bankruptcy Begin and How Should You Update HORIZON for Bankruptcies?

Bankruptcies

• The first thing a creditor/debtor receives from the bankruptcy court is the 341 notice A/K/A

Notice of Meeting of Creditors.

• The Creditors, debtors and trustee all attend this meeting.

• What’s the most important piece of information on the 341 notice besides the date/time/place of

the meeting?

• The case number! That tells everyone the case has been filed.

• Creditors should file a proof of claim by the last date to file a proof of claim. Of course if the

creditor fails to file a proof of claim the debtor’s attorney could file the proof of claim to ensure

the debt is part of the bankruptcy.

• So, what should you do in HORIZON?

Bankruptcies

LN - Should you update

the bankruptcy information

in the loan application?

Bankruptcies

What should you do with

the information in the

mortgage application?

Bankruptcies

Remember the ML special function

codes:

CHP07/CHP09/CHP11/CHP12/CHP13

Bankruptcies

Then there is the borrower

information within RM…..

This slide and next.

Bankruptcies

Bankruptcies

Last, should you update

the bankruptcy code in

Collections?

Bankruptcies

Within the central

lookup file, application

code ‘SI’.

41

Chapters 7 and 11

Let’s Get into Specific Bankruptcy Scenarios

Bankruptcies

42

Oh no, just got notified that

the client filed for a Chapter

7 bankruptcy. What do I do?

Bankruptcies

43

Chapter 7 or 11 Bankruptcy

44

• Frequently Asked Question 27. Questions: Accounts included in Bankruptcy Chapter 7 or 11:

• (a) How should an account be reported when all borrowers associated to the account filed

Bankruptcy Chapter 7 or 11? Answer: Report the account according to the following guidelines:

(All Borrowers Filed Bankruptcy Chapter 7 or 11)

• Month BK Filed:

– CII = A or B (Petition for Chapter 7 or 11 Bankruptcy)

– Account Status = status at time of petition

– Payment History = first character based on previous month’s status plus prior history

– Current Balance = outstanding balance amount

– Scheduled Monthly Payment Amount = contractual monthly payment amount

– Amount Past Due = dependent on status

– Date of Account Information = current month’s date


45

• How should an account be reported when all borrowers associated to the account filed

Bankruptcy Chapter 7 or 11? Answer: Report the account according to the following guidelines:

• (All Borrowers Filed Bankruptcy Chapter 7 or 11)

• Note: Authorized Users (ECOA Code 3) on accounts included in a bankruptcy petition should

either be terminated (ECOA Code T) or deleted (ECOA Code Z) from the account because they

are not contractually liable for payments.


46

Step 1:

Fill in the Bankruptcy

Information on the

Borrower Information

screen within Customer

Inquiry. Access Additional

Bankruptcy hyperlink.


47

Populate

information

on the

second

screen.


48

Step 2:

Populate Bankruptcy

information at the loan

level within Non-

Accrual/Charge off

maintenance option.


49

Step 3:

Update Credit Bureau

information,

Consumer Info

Indicator, with a value

of ‘A’.

Taking these steps will ensure the account within Collections is

updated and information is reported properly to the credit

bureaus.

Chapter 7 and 11 Bankruptcies

• Should we follow the same process for ML?

– Step 1: Yes.

– Step 3: Yes.

– Step 2: No.

• Step 2 no? What should I do?

Chapter 7 or 11 Bankruptcies

51

Ensure you have added a

special function code that

defines the bankruptcy

chapter.


52

• Months Between Petition Filed & BK Resolution (Reaffirmation of Debt, Lease Assumption,

Discharged, Dismissed, Withdrawn)

– CII = Blank (previous petition value reported is retained) or CII = A or B


– Payment History = increment first position with value ‘D’ (plus history reported prior to bankruptcy filing)





• Reaffirmation of Debt or Lease Assumption

– CII = R (Reaffirmation of Debt) or 2A (Lease Assumption)

– Account information as it applies going forward


53

• BK Discharged

– CII = E or F (Discharged through BK Chapter 7 or 11)


– Payment History = increment first position with value ‘D’ (plus prior months’ history)





• Note: After reporting the discharge CII for all Filers, discontinue reporting the account.


54

• Reaffirmation of Debt Rescinded

– CII = V (Chapter 7 Reaffirmation of Debt Rescinded)


– Payment History = increment first position based on previous month’s Account Status, plus prior history





• Note: After reporting CII ‘V’ for all Filers, if the bankruptcy has been discharged, discontinue

reporting the account. If the bankruptcy has not yet been discharged, continue reporting the

account and Filers with the applicable CIIs.


55

• Dismissed

– CII = I or J (BK Chapter 7 or 11 Dismissed)


• BK Withdrawn

– CII = M or N (BK Chapter 7 or 11 Withdrawn)


56

How about a Chapter 12 or 13 Bankruptcy?

Chapter 13 Bankruptcy

57

• Month BK Filed

– CII = C or D (Petition for Chapter 12 or 13 Bankruptcy)


– Payment History = first character based on previous month’s Account Status, plus prior history






58

• Months Between Petition Filed & BK Resolution (Confirmed Plan, BK Dismissed, Withdrawn)

– CII = Blank (previous value reported is retained) or CII = C or D


– Payment History = increment first position with value ‘D’ (plus history reported prior to BK filing)






59

• BK Chapter 12 or 13 Converted to BK Chapter 7

– CII = A (Petition for Chapter 7 Bankruptcy) or E (Discharged through Bankruptcy Chapter 7), as applicable

• Plan Confirmed

– CII = Blank (previous value reported is retained) or CII = C or D


– Payment History = increment with value ‘D’ (plus prior months’ history)

– Current Balance = Chapter 12 or 13 plan balance1, which should decline as payments are made

– Amount Past Due = Zero

– Terms Duration & Terms Frequency = report changed values, if applicable

– Scheduled Monthly Payment Amount = Chapter 12 or 13 plan payment amount



60

• Plan Completed – All payments made according to plan – no further obligation

– CII = G or H (Discharged/completed through BK Chapter 12 or 13)


– Payment History = increment first position with value ‘D’ (plus prior months’ history)

– Current Balance = Zero

– Scheduled Monthly Payment Amount = Zero

– Amount Past Due = Zero


• Note: After reporting CII ‘G’ or ‘H’ for all Filers, discontinue reporting the account.


61

• Plan Completed – All payments made according to plan – consumer continues to make

payments on Secured Debt (example: mortgage)

– CII = Q (Removal value)

– Account Status = status that applies

– Payment History = first month, increment first position with value ‘D’; in subsequent months, increment based on prior

month’s status

– Current Balance = Outstanding balance amount

– Scheduled Monthly Payment Amount = updated contractual monthly payment amount




62

• BK Dismissed or Withdrawn

– CII = applicable dismissed (K or L) or withdrawn (O or P) value


• What’s the one thing you need to do in HORIZON that differs from a Chapter 7 or 11 Bankruptcy?


Today, ML only, populate the

Bankruptcy Tracking Information.

64

Putting This Together, What Do We Get?

Bankruptcies

• Putting this all together, what do we get?

– Populate the loan application with the appropriate bankruptcy chapter.

– Populate the mortgage application with the appropriate special function code.

– The above will then automatically populate the account within collections, so then you can utilize the bankruptcy code

within collections to have those accounts go to specific bankruptcy queues.

– Populate the RM bankruptcy information.

– Populate the bankruptcy screen within ML if appropriate (more to come on this).

– Populate the credit bureau record.

Bankruptcies

• Why the criticality on populating the bankruptcy screen?

– On August 4, 2016, the Consumer Financial Protection Bureau (Bureau) issued a final rule (2016 Mortgage Servicing

Rule) amending certain mortgage servicing provisions in Regulation X and Regulation Z. Concurrently with the

issuance of the 2016 Mortgage Servicing Rule, the Bureau issued an interpretive rule under the Fair Debt Collection

Practices Act (FDCPA), relating to servicers’ compliance with certain mortgage servicing provisions as amended by the

2016 Mortgage Servicing Rule.

• Join me in our lending update session on Wednesday at 10:30 to go over the changes,

specifically to the periodic statements, as they relate to loans in bankruptcy.

Paul Stokes

[email protected]

Documents

715 HORIZON Lending Managing Your Credit Bureau Processesempower1.fisglobal.com/rs/650-KGE-239/images/715 HORIZON... · 2020. 9. 10. · Managing Your Credit Bureau Processes May