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Compliance The deal on risk-based pricing notices
WASHINGTON (11/17/10)--Risk-based pricing notices must be provided before the first transaction is made under open-end loan plans, but not earlier than the time that an approval decision is communicated to the member, according to the Credit Union National Association (CUNA). In this month’s Compliance Challenge, CUNA noted that additional notices are not required for subsequent line of credit advances, but separate notices are required whenever the lending credit union makes periodic reviews of a given account. These account reviews can take place, for example, on a semi-yearly or yearly basis, and must, like the notices that are provided for credit applicants, include a statement that the consumer’s credit report includes information about the consumer’s credit history. The review notices must be provided at the time that the decision to increase the annual percentage rate (APR) of a given loan is communicated to the member or consumer, “or no more than five days after the APR increase if no such notice is provided, if permitted by law,” CUNA said. This next section is confusing here since the original creditor only comes into play w/ the risk-based pricing notice provided to loan applicants, not existing borrowers. This was from another Q&A. For the full Compliance Challenge, use the resource link.


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