Consumer Credit Reporting: Compliance Guidelineseoplugin.commpartners.com/cdia/080911/Final Presentation.pdfCompliance Condition Codes Accounts closed at consumer’s request Accounts

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© 2008 – Consumer Data Industry Assn.

Consumer Credit Reporting:Compliance Guidelines

Presented by the

CDIA Metro 2 Format Task Force


Today’s Presenters

Debbie Seneway, CPTChairperson

Educational ConsultantExperian

Lynn HudziakInformation Services Consultant

Equifax

Julie MoroschanTransUnion

Senior Project Consultant


Introduction

Focus of today’s discussion is on complete and accurate reporting, specific to:

� Fair Credit Reporting Act (FCRA)

� Fair Credit Billing Act (FCBA)

� Accounts included in Bankruptcy

� Equal Credit Opportunity Act (ECOA)

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Disclaimer

� The purpose of this training is to provide guidance in Metro 2 reporting.

� This information is not intended to be legal advice.

� Furnishers of information are solely responsible for the accuracy of the information furnished to a consumer reporting agency.


No legal advice. Any person using the CRRG, the Metro 2 Format, or information from the Metro 2 Task Force concerning the Metro 2 Format; or any software vendors that provide Metro 2 programming software acknowledges that such documents or communications are not made available for the purpose of providing legal advice or other counsel concerning the accuracy of the information furnished to a consumer reporting agency. Such persons rely solely upon their own determination as to the selection of the appropriate Metro 2 Code to meet any furnisher obligations under the FCRA.


Disclaimer of liability. Any person using the CRRG, the Metro 2 Format, or information from the Metro 2 Task Force concerning the Metro 2 Format; or any software vendors that provide Metro 2 programming software acknowledges that the fees paid, directly or indirectly, to receive the CRRG, the Metro 2 Format, or information from the Metro 2 Task Force concerning the Metro 2 Format are based upon the expectation that such person will be solely responsible for the accuracy of the information furnished to a consumer reporting agency.

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ANY PERSON USING THE CRRG, THE METRO 2 FORMAT OR INFORMATION OBTAINED FROM THE METRO 2 TASK FORCE; OR ANY SOFTWARE VENDORS THAT PROVIDE METRO 2 PROGRAMMING SOFTWARE AGREES THAT UNDER NO CIRCUMSTANCES WILL THE CONSUMER DATA INDUSTRY ASSOCIATION (CDIA) OR ANY CONSUMER REPORTING AGENCY HAVE ANY OBLIGATION OR LIABILITY TO SUCH PERSON FOR ANY DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES SUSTAINED BY SUCH PERSON ARISING OUT OF SUCH PERSON’S FURNISHING OF CONSUMER INFORMATION TO A CONSUMER REPORTING AGENCY REGARDLESS OF HOW SUCH DAMAGES ARISE AND WHETHER OR NOT THE CONSUMER REPORTING AGENY OR CDIA WAS ADVISED SUCH DAMAGES MIGHT ARISE. SHOULD THIS DISCLAIMER CONFLICT WITH ANY PROVISION OF ANY OTHER AGREEMENT, SUCH PERSON AGREES THAT THIS DISCLAIMER SHALL SUPERSEDE SUCH CONFLICTING PROVISION.


Discussion Topics

� Compliance Condition Codes� Accounts closed at consumer’s request

� Accounts in dispute

� Date of First Delinquency

� Consumer Information Indicators� Bankruptcy/Personal Receivership

� Reaffirmation of Debt/Lease Assumption

� ECOA Codes


Compliance Condition CodesField 20

� Meets reporting requirements of the Fair Credit Reporting Act and/or the Fair Credit Billing Act

� Required field whenit applies to the accountbeing reported

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Compliance Condition Codes

� Closed Accounts:

XA = Account closed at consumer’s request


Compliance Condition CodesDisputed Accounts

� FCRA:� XB = Account information in dispute under Fair Credit

Reporting Act� XC = Completed investigation of FCRA dispute – consumer

disagrees

� FCBA:� XF = Account in dispute under FCBA� XG = FCBA dispute resolved – consumer disagrees

� FCRA/FCBA:� XH = Account previously in dispute – now resolved,

reported by data furnisher



Combination Codes

� XD = Account closed at consumer’s request and in dispute under FCRA

� XE = Account closed at consumer’s request and dispute investigation completed, consumer disagrees (FCRA and FCBA)

� XJ = Account closed at consumer’s request and in dispute under FCBA

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Report code one time only when condition applies. Code will be retained until another code or the removal value is reported.

Example:� XB is reported in January 2008.

� Blank is reported in February & March 2008, so XB is retained.

� XA is reported in April 2008.

� In April, XB is replaced by XA.



� Removal CodeXR = Removes most recently reported Compliance Condition Code

Example:

� XF is reported in January 2008.

� XR is reported in March 2008.

� In March, XF is removed.



� Do NOT use XR as a default value.

� If a Compliance Condition Code does not apply, blank fill this field.

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Compliance Condition Codes (CCCs)Common Questions

� Can the same CCC be reported each month, rather than one time only?

� Follow the standard guideline and report CCCs one time only.

� It is unnecessary to continue reporting the same code month after month.



� Do I have to delete the previously-reported CCC before I can report a new one?

� No. A newly reported CCC will automatically replace the previously-reported code.



� Do I have to report a dispute CCC when I receive a consumer dispute verification (CDV) from the consumer reporting agency?

� You are only required to report a dispute CCC when the consumer disputes the account directly with you, the data furnisher.

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FCRA Compliance/Date of First DelinquencyField 25

� Used to ensure compliance with the Fair Credit Reporting Act

� Contains the date of the first delinquency, in an unbroken chain, that led to the status being reported


Date of First DelinquencyHierarchy

Date of bankruptcy or personal receivership notification

Current Account with Bankruptcy, Personal Receivership or Reaffirmation Rescinded

Date of first delinquency that led to Payment Rating being reported

Payment Ratings that are Delinquent and Derogatory with specified Account Status Codes

Date of first delinquency that led to Account Status being reported

Account Status Codes that are Delinquent, Derogatory and Paid derogatory

Example of Date of First DelinquencyDelinquent to Current & Delinquent Again

Date of AcctInformation Due Date Status Date of 1st Delinquency

01/11/2008 12/20/2007 11 Zero fill

02/11/2008 01/20/2008 11 Zero fill

03/11/2008 02/20/2008 71 02/19/2008 (1st Delinquency)(January payment not made)

04/11/2008 03/20/2008 78 02/19/2008(Jan. & Feb. payments not made)

05/11/2008 04/20/2008 11 Zero fill

06/11/2008 05/20/2008 71 05/20/2008 (1st Delinquency)(April payment not made)

07/11/2008 06/20/2008 78 05/20/2008(April & May payments not made)

08/11/2008 07/20/2008 80 05/20/2008(April, May, June payments not made)

09/11/2008 08/20/2008 97 05/20/2008(April →→→→ July payments not made)

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Example of Date of First DelinquencyDelinquent account never returns to Current


01/18/2008 01/15/2008 11 Zero fill02/18/2008 02/15/2008 11 Zero fill03/18/2008 03/15/2008 71 03/16/2008 (1st Delinquency)

(February payment not made)04/18/2008 04/15/2008 78 03/16/2008

(Feb. & Mar. payments not made)05/18/2008 05/15/2008 78 03/16/2008

(Feb. pymt. made, Mar. & Apr. payments not made)06/18/2008 06/15/2008 80 03/16/2008

(Mar. �� May payments not made)07/18/2008 07/15/2008 82 03/16/2008

(Mar. �� Jun. payments not made)08/18/2008 08/15/2008 13 03/16/2008

Payment Rating = 5

Example of Date of First DelinquencyRolling Delinquencies


01/11/2008 12/20/2007 11 Zero fill02/11/2008 01/20/2008 11 Zero fill

03/11/2008 02/20/2008 71 02/19/2008 (1st Delinquency)(January payment not made)

04/11/2008 03/20/2008 78 02/19/2008(January & February payments not made)

05/11/2008 04/20/2008 80 02/19/2008(January →→→→ March payments not made)

06/11/2008 05/20/2008 71 02/19/2008(April payment not made)

07/11/2008 06/20/2008 71 02/19/2008(May payment not made)

08/11/2008 07/20/2008 78 02/19/2008(May →→→→ June payments not made)

09/11/2008 08/20/2008 71 02/19/2008(July payment not made)


FCRA Compliance/Date of First Delinquency

Credit Reporting Resource Guide

Exhibit contains:

� Reporting guidelines

� Examples for reporting the date of first delinquency

� Excerpts from the FCRA

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FCRA Compliance/Date of First DelinquencyCommon Questions

� If the due date is the 1st of the month and the consumer doesn’t make their February payment, how do we report the Account Status and Date of First Delinquency when we report on February 28th?

� Delinquencies are calculated based on the Due Date.

� Standard definitions of delinquent statuses are based on “number of days past the due date”.

Example of Account Status/Date of First Delinquency – “February” Question


01/31/2008 01/01/2008 11 Zero fill(January payment made)

02/29/2008 02/01/2008 11 Zero fill(February payment not made – 28 days past due date)

03/31/2008 03/01/2008 71 03/02/2008 (1st Delinquency) (Feb & Mar payments not made – 59 days past due date)

04/30/2008 04/01/2008 78 03/02/2008(Feb → Apr payments not made – 89 days past due date)


FCRA Compliance/Date of First DelinquencyCommon Questions

� If we purchase an account from another lender and the account is delinquent, what Date of First Delinquency do we report?� DOFD with the original lender that led to the account status being reported

� Original lender’s Date Opened (if above DOFD not available)

� If original lender’s DOFD or Date Opened is not available, do not report the account.

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Consumer Information Indicators (CII)Field 38 – Base SegmentField 11 – J1 and J2 Segments

� Used to report information at the consumer level, rather than at the account level

� Contains a value that indicates a special condition that applies only to the consumer on whom it is reported

� Separate CII field for each consumer reported on an account (primary and associated borrowers)


Consumer Information Indicators

� 3 Categories of CIIs:

� Bankruptcy/Personal Receivership

� Reaffirmation of Debt/Lease Assumption

� Credit grantor cannot locate consumer / consumer located


Consumer Information IndicatorsBankruptcy

� Petitions for Bankruptcy� A = Chapter 7� B = Chapter 11� C = Chapter 12� D = Chapter 13

� Discharged/Completed through Bankruptcy� E = Chapter 7� F = Chapter 11� G = Chapter 12� H = Chapter 13

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Consumer Information IndicatorsBankruptcy

� Dismissed Bankruptcies� I = Chapter 7� J = Chapter 11� K = Chapter 12� L = Chapter 13

� Withdrawn Bankruptcies� M = Chapter 7� N = Chapter 11� O = Chapter 12� P = Chapter 13


Consumer Information Indicators Bankruptcy/Personal Receivership

� Z = Bankruptcy – Undesignated Chapter(Report specific indicators when known.)

� 1A = Personal Receivership(specific to Ohio and Wisconsin)


Consumer Information Indicators Reaffirmation of Debt/Lease Assumption

� R = Reaffirmation of Debt

� Reaffirmation of Debt Rescinded:

� V = Chapter 7

� W = Chapter 11

� X = Chapter 12

� Y = Chapter 13

� 2A = Lease Assumption

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Report code one time only when condition applies. Code will be retained until another code or the removal value is reported.

Example:

� A is reported in January 2008.

� Blank is reported in February 2008, so A is retained.

� E is reported in March 2008.

� In March, A is replaced by E.


Consumer Information IndicatorsRemoval Codes

Each category of Consumer Information

Indicators has its own removal code.

� Q = Removes Bankruptcy Indicators A-P, Z, or Personal Receivership Indicator 1A

� S = Removes Reaffirmation of Debt and Rescinded Indicators R, V-Y, or 2A

Example:

� A is reported in January 2008 in error.

� Q is reported in March 2008 to remove the Bankruptcy CII A.


Consumer Information Indicators Removal Codes

� Do not use a removal code as a default value.

� If a CII does not apply to the consumer, blank fill this field.

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The progression of a Bankruptcy can be:1. A petition is filed for Bankruptcy.

2. The petition can be dismissed by the court, withdrawn by the petitioner, or discharged.

3. A debt can be reaffirmed through the court prior to the discharge.

4. The reaffirmation can be rescinded, causing the debt to be included in the Bankruptcy.



Example of Bankruptcy Progression:

1. Jonathan Miller files a Bankruptcy Chapter 13 petition.

Report CII = D.

2. Jonathan completes his repayment plan.

Report CII = H.



Example of Bankruptcy Progression:

1. Betsy Wright files a Bankruptcy Chapter 7 petition.Report CII = A.

2. Betsy reaffirms through the court that she will repay her car loan to ABC Bank.Report CII = R.

3. Poor Betsy simply cannot pay ABC Bank. The reaffirmation is rescinded through the court.Report CII = V.

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Example – Only primary borrower filed

petition for Chapter 7:

� Base Segment CII = A(Chapter 7 Petition)

� J1 Segment CII = Blank(Bankruptcy not applicable)



Example – CII plus Account Status Code:

� Base Segment CII = A(Chapter 7 Petition filed)

� J1 Segment CII = Blank(Bankruptcy not applicable – non-filer)

� Account Status Code = 84(180 days or more past the due date)

� Current Balance = $2,124



Example – Both borrowers filed petition

for Chapter 7:


� J1 Segment CII = A

� Account Status = 83(150-179 days past the due date)


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Example – Two different CIIs:


� J1 Segment CII = T(Credit grantor cannot locate consumer)


Consumer Information IndicatorRecap

CII = A

CII = T

Consumer 1

Consumer 2

Account Number

4676468789

CII = A

CII = Blank

Consumer 1

Consumer 2

Account Number

3575335

CII = A

CII = A

Consumer 1

Consumer 2

Account Number

2464567


Example: Date of 1st DelinquencyCurrent Account in Bankruptcy

DOAI Status Definition CII Date of 1st Delinq

02/28/2008 11 Current Blank Zero Fill




06/30/2008 11 Current A* 06/30/2008

07/30/2008 11 Current Blank Zero fill

* Consumer Information Indicator A = Petition for Chapter 7 Bankruptcy

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Example: Date of 1st DelinquencyDelinquent Account in Bankruptcy

DOAI Status Definition CII Date of 1st Delinq




05/30/2008 71 Delinq 30 Blank 05/14/2008

06/30/2008 78 Delinq 60 A* 05/14/2008

* Consumer Information Indicator A = Petition for Chapter 7 Bankruptcy


Relief from Stay

� A Bankruptcy judge grants a secured creditor the right to collect the debt to the extent that the order permits.

� For reporting purposes, the account is still included in Bankruptcy and the appropriate Consumer Information Indicator should be reported.


Reaffirmed Debts

Completely Reaffirmed Debts:

Report Consumer Information Indicator ‘R’ for the consumer(s) to whom it applies.

Reaffirmation Rescinded:

Report Consumer Information Indicator V, W, X

or Y for the consumer(s) to whom it applies.

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Reaffirmed Debts

Partially Reaffirmed Debts:

� For the consumer who reaffirms a portion of the debt, report a separate tradeline with a new Account Number for the portion of the account that is reaffirmed & in repayment. Report Consumer Information Indicator ‘R’. Adjust the Current Balance.

� Report the original tradeline, which is included in Bankruptcy, with the appropriate Account Status and the Bankruptcy CII for the consumer to whom it applies. Adjust the Current Balance.


Debts that are Not Reaffirmed

Accounts must be reported with the appropriate Bankruptcy Consumer Information Indicator if they are included in Bankruptcy.


Voluntarily Surrendered or Redeemed Merchandise

� Voluntarily Surrendered Merchandise:

� Report Account Status 95 (Voluntary Surrender)

� Report appropriate Consumer Information Indicator

� Redeemed Merchandise:

� Report Account Status 13 (Paid/Closed)

� Report Special Comment AU (Account paid in full for less than the full balance)

� Report appropriate Consumer Information Indicator

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Chapter 13All associated borrowers filed BK

� Base Segment CII = D(Chapter 13 Petition)

� J1 Segment CII = D

� Account Status = 11(Current - 0 → 29 days past the due date)



Chapter 13 – Joint AccountsOne borrower filed BK & one did notMethod 1: Both borrowers held to the same terms based on the Chapter 13 plan

� Report one account.

� If terms have changed per the plan, report the new Terms Duration, Terms Frequency and Scheduled Monthly Payment Amount.

� For the borrower who filed, report CII ‘D’while payments are being made through the plan, or ‘H’ when payments have been completed through the plan.

� Report a blank CII for the non-filer.


Chapter 13 – Joint AccountsOne borrower filed BK & one did notMethod 2: Borrowers are given different terms –report two accounts

� For the Filer: � Report existing account number with adjusted terms and

amounts, according the Chapter 13 plan.� Report CII ‘D’ while payments are being made through the

plan, or ‘H’ when all payments have been completed.

� For the non-filer:� Report ECOA ‘T’ to terminate this consumer from the original

account.� Report a 2nd account with a different Account Number and

new Date Opened with appropriate terms, amounts and Account Status that apply to this borrower.

� Do not report the payment history from the original account.� Report a blank CII.

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Closed Bankruptcies

� Report Consumer Information Indicator ‘Q’ to remove the previously-reported bankruptcy petition indicator.

� If the case is re-opened, report the appropriate CII according to the disposition; e.g., petition, discharge.



� Credit Reporting Resource Guide

� Frequently Asked Questions & Answers

� Accounts Included in Bankruptcy


Consumer Information IndicatorsCommon Questions

� If a consumer files Bankruptcy Chapter 13 and the court says they only need to pay back $10,000 of the $15,000 they still owe, what Current Balance do I report?

� Report the court-determined repayment amount of $10,000.

� Current Balance may decline as consumer makes payments.

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Consumer Information IndicatorsCommon Questions

� If the consumer converts from a Chapter 7 Bankruptcy to a Chapter 13 Bankruptcy, do I have to remove the Chapter 7 indicator before reporting the Chapter 13 indicator?

� No – reporting a new CII value causes the previously-reported value to be overlaid.


ECOA CodesField 37 – Base SegmentField 10 – J1 and J2 Segments

� Meets the reporting requirements of the Equal Credit Opportunity Act (ECOA)

� Defines the relationship of the consumer to the account

� Separate ECOA Code for each consumer reported on an account (primary and associated borrowers)

BaseMaker7

J1, J2Co-maker or Guarantor

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J1, J2Authorized User3

Base, J1, J2Joint –

contractual liability

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Base Individual1

Metro 2 Segments

DefinitionECOA Code

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Association Terminated

T = Association with account terminated

Month 1:

� Base ECOA for Jonathan = 2

� J1 ECOA for Roseann = 2

Month 2:

� Base ECOA for Jonathan = T

� J1 ECOA for Roseann = 2

Month 3:

� Base ECOA for Roseann = 1


Deceased

X = Consumer Deceased

Month 1: � Base ECOA for Edward = 2� J1 ECOA for Theresa = 2� J2 ECOA for Evelyn = 3

Month 2:� Base ECOA for Edward = 2� J1 ECOA for Theresa = 2� J2 ECOA for Evelyn = X

Month 3:� Base ECOA for Edward = 2� J1 ECOA for Theresa = 2


Consumer Reported in Error

Z = Delete Consumer

� The entire account is deleted for this consumer.

� Only report ECOA Z if the consumer was reported in error.

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Delete Consumer

Month 1:

� Base ECOA for Paul = 2

� J1 ECOA for Tina = 2

Month 2:


� J1 ECOA for Tina = Z

Month 3:



T, X and Z

� Each of these ECOA Codes has a specific purpose.

� ECOA Codes T, X and Z are not interchangeable.


ECOA Codes

W = Business/Commercial

� Base Segment contains consumer name with applicable ECOA Code. (Consumer must be personally liable.)

� J2 Segment contains business name with ECOA W.

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Logical ECOA Combinations

Base Segment

� ECOA 1

� ECOA 2

� ECOA 7

J1/J2 Segment

� 3, T, W, X, Z

� 2, 3, 5, T, W, X, Z

� 5, T, W, X, Z


ECOA CodesCommon Questions

� Should I report ECOA Code ‘Z’ to remove a borrower when they are no longer participating on an account?

� No. Report ECOA Code ‘T’ to terminate the borrower’s association.

� Previous account history is retained when the ‘T’ is reported.


ECOA CodesCommon Questions

� If both borrowers on a joint account are contractually responsible (ECOA 2), which one do I report in the Base Segment?

� Either one!

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Credit Reporting Resource Guide

� Go to CDIA’s website to purchase or download a copy of the Credit Reporting Resource Guide.

www.cdiaonline.org/data.cfm

� To purchase a hardcopy, go to the CDIA Store.

� To download a copy, access the Metro 2 section of the website and use the following case-sensitive user name and password:

� User Name = cdiametro� Password = E18kSMAV


Thank you for your interest!

Questions can be submitted to the CDIA Metro 2 Format Task Force throughCDIA at:

[email protected]

Documents

Consumer Credit Reporting: Compliance Guidelineseoplugin.commpartners.com/cdia/080911/Final Presentation.pdfCompliance Condition Codes Accounts closed at consumer’s request Accounts