[April]

When we have a automobile loan we pull the value from the NADA website. If the value of the vehicle is insufficient should we be adding the NADA website to our Adverse Action? Currently we have the denial reason as Value or Type of Collateral Insufficient, and that our credit decision was based on Transunion because we do tier rates based on score.

[rcooper]

I assume you are asking if you should add the NADA information under the “outside source other than consumer reporting agency” portion of the AAN that is required by the FCRA, if applicable. The requirement in section 615(b)(1) of the FCRA states:

(1) In general. Whenever credit for personal, family, or household purposes involving a consumer is denied or the charge for such credit is increased either wholly or partly because of information obtained from a person other than a consumer reporting agency bearing upon the consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, the user of such information shall, within a reasonable period of time, upon the consumer’s written request for the reasons for such adverse action received within sixty days after learning of such adverse action, disclose the nature of the information to the consumer. The user of such information shall clearly and accurately disclose to the consumer his right to make such written request at the time such adverse action is communicated to the consumer.

You would not disclose NADA on the AAN because information from that source relates to the value of the collateral; it does not provide information related to the consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.

[rcooper]

After posting the answer above we have discussed this in our office and believe the safest course of action is to disclose the NADA information on the AAN as some examiners may view this as providing information on the creditworthiness of the applicant.

We suggest you follow the advice of your regulator.

[Author]

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