Can A Note Buyer Legally Obtain A Credit Report?
We are about to make an offer on a couple notes that did not include a credit report on the investor who bought a loaded rental. Considering its an important part of evaluating the repayment of the note, and correct me if I am wrong, are we able to pull their credit report as a potential investor before we buy a note?
Section 604 (a)(3)(E) & (F) of the Fair Credit Reporting Act states:
item subsection “E” says…
Intends to use the information as a potential investor or servicer, or current insurer, in connection with a valuation of, or an assessment of the credit or prepayment risks associated with, an existing credit obligation
In addition, subsection “F” says…
Otherwise has a legitimate business need for information in connection with a business transaction that is initiated by the consumer or to review an account to determine whether the consumer continues to meet the terms of the account.
The full document can be found here; http://www.consumer.ftc.gov/sites/default/files/ar...
Does anyone have any instances they could not or should not do this? All replies & comments are appreciated!
In general you need permission to pull someone's credit. If they have granted that permission and such permission follows the note, you may be fine.
Unfortunately, this is one of those issues that is best answered by a legal professional, and I am not one.
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You just posted the rules, yes if you can show a legitimate business connection where the information is critical to underwriting in the business transaction you can pull credit without consent of any kind by the borrower!!!!!!!! Document your business dealings!
It is much easier being a member of a reporting agency as your inquiry will show up and the agency will "front" the questions as to any inquiry, meaning someone gets ticked off they don't call you so much as your membership allows some leeway to making inquiries that the reporting agency justifies....if that makes since. In other words, they will tell folks that you have the right to pull an inquiry under their contract and head off complaints. I pulled credit on all borrowers of notes to be purchased. Not a problem. If you're not a member you may have more issues in showing your relationship to a proposed transaction as the agency will also want to know what you are doing, if you can pull one at all. Members can not pull reports for third parties. :)
