(a) Scope. This section applies to—
(1) any of the following that participates
as a creditor in a transaction—
(i) a bank that is a member
of the Federal Reserve System (other than national banks) and its
subsidiaries;
(ii)
a branch or agency of a foreign bank (other than federal branches,
federal agencies, and insured state branches of foreign banks) and
its subsidiaries;
(iii) a commercial lending company owned or controlled by foreign
banks;
(iv) an organization
operating under section 25 or 25A of the Federal Reserve Act (12 USC
601 et seq., and 611 et seq.);
(v) a bank holding company and an affiliate
of such holding company (other than depository institutions and consumer
reporting agencies); or
(2) any other person that participates
as a creditor in a transaction involving a person described in paragraph
(a)(1) of this section.
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(b) General prohibition on obtaining or using medical
information.
(1) In general. A creditor may not obtain or use medical information pertaining
to a consumer in connection with any determination of the consumer’s
eligibility, or continued eligibility, for credit, except as provided
in this section.
(2) Definitions.
(i) Credit has
the same meaning as in section 702 of the Equal Credit Opportunity
Act, 15 USC 1691a.
(ii) Creditor has the same meaning as in section 702 of the
Equal Credit Opportunity Act, 15 USC 1691a.
(iii) Eligibility, or continued eligibility,
for credit means the consumer’s qualification or fitness to receive,
or continue to receive, credit, including the terms on which credit
is offered. The term does not include—
(A) any determination of
the consumer’s qualification or fitness for employment, insurance
(other than a credit insurance product), or other noncredit products
or services;
(B) authorizing,
processing, or documenting a payment or transaction on behalf of the
consumer in a manner that does not involve a determination of the
consumer’s eligibility, or continued eligibility, for credit; or
(C) maintaining or servicing
the consumer’s account in a manner that does not involve a determination
of the consumer’s eligibility, or continued eligibility, for credit.
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(c) Rule of construction for obtaining and using
unsolicited medical information.
(1) In general. A creditor does not obtain medical information in violation of the
prohibition if it receives medical information pertaining to a consumer
in connection with any determination of the consumer’s eligibility,
or continued eligibility, for credit without specifically requesting
medical information.
(2) Use of unsolicited medical information. A creditor that receives unsolicited medical information in the
manner described in paragraph (c)(1) of this section may use that
information in connection with any determination of the consumer’s
eligibility, or continued eligibility, for credit to the extent the
creditor can rely on at least one of the exceptions in section 222.30(d)
or (e).
(3) Examples. A creditor does not obtain medical
information in violation of the prohibition if, for example—
(i) in response
to a general question regarding a consumer’s debts or expenses, the
creditor receives information that the consumer owes a debt to a hospital;
(ii) in a conversation
with the creditor’s loan officer, the consumer informs the creditor
that the consumer has a particular medical condition;
(iii) in connection with
a consumer’s application for an extension of credit, the creditor
requests a consumer report from a consumer reporting agency and receives
medical information in the consumer report furnished by the agency
even though the creditor did not specifically request medical information
from the consumer reporting agency.
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(d) Financial-information exception for
obtaining and using medical information.
(1) In general. A creditor may obtain and use medical information pertaining to
a consumer in connection with any determination of the consumer’s
eligibility, or continued eligibility, for credit so long as—
(i) the
information is the type of information routinely used in making credit-eligibility
determinations, such as information relating to debts, expenses, income,
benefits, assets, collateral, or the purpose of the loan, including
the use of proceeds;
(ii) the creditor uses the medical information in a manner and to
an extent that is no less favorable than it would use comparable information
that is not medical information in a credit transaction; and
(iii) the creditor does
not take the consumer’s physical, mental, or behavioral health, condition
or history, type of treatment, or prognosis into account as part of
any such determination.
6-2964
(2) Examples.
(i) Examples
of the types of information routinely used in making credit-eligibility
determinations. Paragraph (d)(1)(i) of this section permits a
creditor, for example, to obtain and use information about—
(A) the dollar
amount, repayment terms, repayment history, and similar information
regarding medical debts to calculate, measure, or verify the repayment
ability of the consumer, the use of proceeds, or the terms for granting
credit;
(B) the value,
condition, and lien status of a medical device that may serve as collateral
to secure a loan;
(C)
the dollar amount and continued eligibility for disability income,
workers’ compensation income, or other benefits related to health
or a medical condition that is relied on as a source of repayment;
or
(D) the identity of
creditors to whom outstanding medical debts are owed in connection
with an application for credit, including but not limited to, a transaction
involving the consolidation of medical debts.
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(ii) Examples
of uses of medical information consistent with the exception.
(A) A consumer includes on an application
for credit information about two $20,000 debts. One debt is to a hospital;
the other debt is to a retailer. The creditor contacts the hospital
and the retailer to verify the amount and payment status of the debts.
The creditor learns that both debts are more than 90 days past due.
Any two debts of this size that are more than 90 days past due would
disqualify the consumer under the creditor’s established underwriting
criteria. The creditor denies the application on the basis that the
consumer has a poor repayment history on outstanding debts. The creditor
has used medical information in a manner and to an extent no less
favorable than it would use comparable nonmedical information.
(B) A consumer indicates
on an application for a $200,000 mortgage loan that she receives $15,000
in long-term disability income each year from her former employer
and has no other income. Annual income of $15,000, regardless of source,
would not be sufficient to support the requested amount of credit.
The creditor denies the application on the basis that the projected
debt-to-income ratio of the consumer does not meet the creditor’s
underwriting criteria. The creditor has used medical information in
a manner and to an extent that is no less favorable than it would use
comparable nonmedical information.
(C) A consumer includes on an application
for a $10,000 home-equity loan that he has a $50,000 debt to a medical
facility that specializes in treating a potentially terminal disease.
The creditor contacts the medical facility to verify the debt and
obtain the repayment history and current status of the loan. The creditor
learns that the debt is current. The applicant meets the income and
other requirements of the creditor’s underwriting guidelines. The
creditor grants the application. The creditor has used medical information
in accordance with the exception.
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(iii) Examples
of uses of medical information inconsistent with the exception.
(A) A consumer applies for $25,000 of credit
and includes on the application information about a $50,000 debt to
a hospital. The creditor contacts the hospital to verify the amount
and payment status of the debt, and learns that the debt is current
and that the consumer has no delinquencies in her repayment history.
If the existing debt were instead owed to a retail department store,
the creditor would approve the application and extend credit based
on the amount and repayment history of the outstanding debt. The creditor,
however, denies the application because the consumer is indebted to
a hospital. The creditor has used medical information, here the identity
of the medical creditor, in a manner and to an extent that is less
favorable than it would use comparable nonmedical information.
(B) A consumer meets with
a loan officer of a creditor to apply for a mortgage loan. While filling
out the loan application, the consumer informs the loan officer orally
that she has a potentially terminal disease. The consumer meets the
creditor’s established requirements for the requested mortgage loan.
The loan officer recommends to the credit committee that the consumer
be denied credit because the consumer has that disease. The credit
committee follows the loan officer’s recommendation and denies the
application because the consumer has a potentially terminal disease.
The creditor has used medical information in a manner inconsistent
with the exception by taking into account the consumer’s physical,
mental, or behavioral health, condition, or history, type of treatment,
or prognosis as part of a determination of eligibility or continued
eligibility for credit.
(C) A consumer who has an apparent medical condition, such as a consumer
who uses a wheelchair or an oxygen tank, meets with a loan officer
to apply for a home-equity loan. The consumer meets the creditor’s
established requirements for the requested home-equity loan and the
creditor typically does not require consumers to obtain a debt-cancellation
contract, debt-suspension agreement, or credit insurance product in
connection with such loans. However, based on the consumer’s apparent
medical condition, the loan officer recommends to the credit committee
that credit be extended to the consumer only if the consumer obtains
a debt-cancellation contract, debt-suspension agreement, or credit
insurance product from a nonaffiliated third party. The credit committee
agrees with the loan officer’s recommendation. The loan officer informs
the consumer that the consumer must obtain a debt-cancellation contract,
debt-suspension agreement, or credit insurance product from a nonaffiliated
third party to qualify for the loan. The consumer obtains one of these
products and the creditor approves the loan. The creditor has used
medical information in a manner inconsistent with the exception by
taking into account the consumer’s physical, mental, or behavioral
health, condition, or history, type of treatment, or prognosis in setting
conditions on the consumer’s eligibility for credit.
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(e) Specific
exceptions for obtaining and using medical information.
(1) In general. A creditor may obtain and use medical information pertaining to
a consumer in connection with any determination of the consumer’s
eligibility, or continued eligibility, for credit—
(i) to
determine whether the use of a power of attorney or legal representative
that is triggered by a medical condition or event is necessary and
appropriate or whether the consumer has the legal capacity to contract
when a person seeks to exercise a power of attorney or act as legal
representative for a consumer based on an asserted medical condition
or event;
(ii) to
comply with applicable requirements of local, state, or federal laws;
(iii) to determine,
at the consumer’s request, whether the consumer qualifies for a legally
permissible special credit program or credit-related assistance program
that is—
(A) designed to meet the special needs of
consumers with medical conditions; and
(B) established and administered pursuant
to a written plan that—
(1) identifies the class of persons that the program is designed
to benefit; and
(2) sets forth the procedures and standards for extending credit or
providing other credit-related assistance under the program;
(iv) to the extent necessary
for purposes of fraud prevention or detection;
(v) in the case of credit for the purpose
of financing medical products or services, to determine and verify
the medical purpose of a loan and the use of proceeds;
(vi) consistent with safe and
sound practices, if the consumer or the consumer’s legal representative
specifically requests that the creditor use medical information in
determining the consumer’s eligibility, or continued eligibility,
for credit, to accommodate the consumer’s particular circumstances,
and such request is documented by the creditor;
(vii) consistent with safe and sound practices,
to determine whether the provisions of a forbearance practice or program
that is triggered by a medical condition or event apply to a consumer;
(viii) to determine the consumer’s
eligibility for, the triggering of, or the reactivation of a debt-cancellation
contract or debt-suspension agreement if a medical condition or event
is a triggering event for the provision of benefits under the contract
or agreement; or
(ix)
to determine the consumer’s eligibility for, the triggering of, or
the reactivation of a credit insurance product if a medical condition
or event is a triggering event for the provision of benefits under
the product.
6-2968
(2) Example of
determining eligibility for a special credit program or credit assistance
program. A not-for-profit organization establishes a credit assistance
program pursuant to a written plan that is designed to assist disabled
veterans in purchasing homes by subsidizing the downpayment for the
home-purchase mortgage loans of qualifying veterans. The organization
works through mortgage lenders and requires mortgage lenders to obtain
medical information about the disability of any consumer that seeks
to qualify for the program, use that information to verify the consumer’s
eligibility for the program, and forward that information to the organization.
A consumer who is a veteran applies to a creditor for a home-purchase
mortgage loan. The creditor informs the consumer about the credit
assistance program for disabled veterans and the consumer seeks to
qualify for the program. Assuming that the program complies with all applicable
law, including applicable fair lending laws, the creditor may obtain
and use medical information about the medical condition and disability,
if any, of the consumer to determine whether the consumer qualifies
for the credit assistance program.
6-2969
(3) Examples
of verifying the medical purpose of the loan or the use of proceeds.
(i) If a consumer applies for $10,000
of credit for the purpose of financing vision-correction surgery,
the creditor may verify with the surgeon that the procedure will be
performed. If the surgeon reports that surgery will not be performed
on the consumer, the creditor may use that medical information to
deny the consumer’s application for credit, because the loan would
not be used for the stated purpose.
(ii) If a consumer applies for $10,000
of credit for the purpose of financing cosmetic surgery, the creditor
may confirm the cost of the procedure with the surgeon. If the surgeon
reports that the cost of the procedure is $5,000, the creditor may
use that medical information to offer the consumer only $5,000 of
credit.
(iii) A
creditor has an established medical loan program for financing particular
elective surgical procedures. The creditor receives a loan application
from a consumer requesting $10,000 of credit under the established
loan program for an elective surgical procedure. The consumer indicates
on the application that the purpose of the loan is to finance an elective
surgical procedure not eligible for funding under the guidelines of
the established loan program. The creditor may deny the consumer’s
application because the purpose of the loan is not for a particular
procedure funded by the established loan program.
6-2970
(4) Examples of obtaining and using medical information at the request
of the consumer.
(i) If a consumer applies for a loan
and specifically requests that the creditor consider the consumer’s
medical disability at the relevant time as an explanation for adverse-payment-history
information in his credit report, the creditor may consider such medical
information in evaluating the consumer’s willingness and ability to
repay the requested loan to accommodate the consumer’s particular
circumstances, consistent with safe and sound practices. The creditor
may also decline to consider such medical information to accommodate
the consumer, but may evaluate the consumer’s application in accordance
with its otherwise applicable underwriting criteria. The creditor
may not deny the consumer’s application or otherwise treat the consumer
less favorably because the consumer specifically requested a medical
accommodation, if the creditor would have extended the credit or treated
the consumer more favorably under the creditor’s otherwise applicable
underwriting criteria.
(ii) If a consumer applies for a loan by telephone and explains that
his income has been and will continue to be interrupted on account
of a medical condition and that he expects to repay the loan by liquidating
assets, the creditor may, but is not required to, evaluate the application
using the sale of assets as the primary source of repayment, consistent
with safe and sound practices, provided that the creditor documents
the consumer’s request by recording the oral conversation or making
a notation of the request in the consumer’s file.
(iii) If a consumer applies for a loan
and the application form provides a space where the consumer may provide
any other information or special circumstances, whether medical or
nonmedical, that the consumer would like the creditor to consider
in evaluating the consumer’s application, the creditor may use medical
information provided by the consumer in that space on that application
to accommodate the consumer’s application for credit, consistent with safe and
sound practices, or may disregard that information.
(iv) If a consumer specifically requests
that the creditor use medical information in determining the consumer’s
eligibility, or continued eligibility, for credit and provides the
creditor with medical information for that purpose, and the creditor
determines that it needs additional information regarding the consumer’s
circumstances, the creditor may request, obtain, and use additional
medical information about the consumer as necessary to verify the
information provided by the consumer or to determine whether to make
an accommodation for the consumer. The consumer may decline to provide
additional information, withdraw the request for an accommodation,
and have the application considered under the creditor’s otherwise
applicable underwriting criteria.
(v) If a consumer completes and signs
a credit application that is not for medical-purpose credit and the
application contains boilerplate language that routinely requests
medical information from the consumer or that indicates that by applying
for credit the consumer authorizes or consents to the creditor obtaining
and using medical information in connection with a determination of
the consumer’s eligibility, or continued eligibility, for credit,
the consumer has not specifically requested that the creditor obtain
and use medical information to accommodate the consumer’s particular
circumstances.
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(5) Example of
a forbearance practice or program. After an appropriate safety-and-soundness
review, a creditor institutes a program that allows consumers who
are or will be hospitalized to defer payments as needed for up to
three months, without penalty, if the credit account has been open
for more than one year and has not previously been in default, and
the consumer provides confirming documentation at an appropriate time.
A consumer is hospitalized and does not pay her bill for a particular
month. This consumer has had a credit account with the creditor for
more than one year and has not previously been in default. The creditor
attempts to contact the consumer and speaks with the consumer’s adult
child, who is not the consumer’s legal representative. The adult child
informs the creditor that the consumer is hospitalized and is unable
to pay the bill at that time. The creditor defers payments for up
to three months, without penalty, for the hospitalized consumer and
sends the consumer a letter confirming this practice and the date
on which the next payment will be due. The creditor has obtained and
used medical information to determine whether the provisions of a
medically triggered forbearance practice or program apply to a consumer.
