Industry Letter

October 29, 2004

To the Institution Addressed:

Re: Fair and Accurate Credit Transactions Act

The Fair and Accurate Credit Transactions Act (FACT Act) became law on December 4, 2003 and amends the Fair Credit Reporting Act (FCRA). The purpose of the FACT Act is to prevent identity theft, improve resolution of consumer disputes, improve the accuracy of consumer records, and make improvements in the use of, and consumer access to, credit information.

The FACT Act contains a special requirement for mortgage lenders that becomes effective on December 1, 2004. As of that date, any mortgage lender that uses a credit score to make or arrange consumer credit secured by one to four unit residential real property must provide to the applicant, for free, the credit scoring information obtained by the mortgage lender from a credit reporting agency that the credit reporting agency would be required to disclose to the consumer. In addition, the mortgage lender must provide the consumer with a notice explaining its use of credit scores and how the consumer may obtain credit score information.

A mortgage lender is not required to disclose a proprietary credit score. In lieu of this, the mortgage lender can arrange for the disclosure of a widely available credit score. In addition, if an automated underwriting system is used, the lender may disclose a credit score and associated key factors provided by a credit reporting agency.

Should you have any questions concerning your obligation under the FACT Act you should contact legal counsel.

Very truly yours,


Kenneth Bielemeier
Deputy Superintendent of Banks