(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 paragraph (e)
of this section.
(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.
(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;
(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; or
(x) So long as the conditions
in paragraphs (e)(1)(x)(A) through (C) of this section are met:
(A) (1) The medical information
is included in the transaction information of an account for a consumer
financial product or service described in 12 CFR 1033.111(b)(1) through
(3), and accessed with the consumer’s authorization; or
(2) The medical information
relates to income, benefits, or the purpose of the loan, including
the use of proceeds. Medical information relating to income and benefits
includes, for example, 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.
(B) 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.
(C) 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 the determination of the consumer’s eligibility,
or continued eligibility, for credit.
6-7968
(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
down payment 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.
6-7969
(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.
6-7970
(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.
6-7971
(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.
(6) Example to comply with applicable requirements of local, state, or
federal laws. A consumer applies for a mortgage loan subject
to section 1026.43(c) or section 1026.34(a)(4) of this chapter, or
an open-end (not home-secured) credit card account subject to section
1026.51(a) of this chapter. The application does not specifically
request medical information, but the consumer provides unsolicited
medical information on the application. The creditor or the card issuer
is permitted under paragraph (e)(1)(ii) of this section to use such
medical information in connection with any determination of the consumer’s
eligibility, or continued eligibility, for credit only to the extent
required by the applicable federal law and implementing regulation.
For example, assume a consumer applies for a mortgage loan subject
to section 1026.43(c) of this chapter. Assume further that the creditor
has not specifically requested medical information on the application,
but the consumer provides information on a current debt obligation,
such as a monthly medical payment plan, that is medical information.
The creditor is permitted under paragraph (e)(1)(ii) of this section
to consider the existence and the amount of the medical payment plan
as required in considering factors under section 1026.43(c)(2) of
this chapter, such as the current debt obligations, consumer’s
monthly debt-to-income ratio, and residual income, in making the repayment
ability determination required under section 1026.43(c)(1) of this
chapter. In this circumstance, the creditor would not be required
to independently verify the existence and amount of the monthly medical
payment plan, as provided for under section 1026.43(c)(3)(iii) of
this chapter. See also Regulation Z (12 CFR 1026.43(c)(3),
comment 43(c)(3)–6), describing a situation in which a consumer
provides a creditor with information on a debt obligation that is
not listed on a consumer report. Further, a creditor or card issuer
is not permitted under paragraph (e)(1)(ii) of this section to obtain
or use any medical information from a consumer reporting agency to
comply with the ability-to-repay rule under section 1026.43(c) of
this chapter for closed-end mortgages, the repayment ability rule
under section 1026.34(a)(4) of this chapter for open-end, high-cost
mortgages, or the ability-to-pay rule under section 1026.51(a) of
this chapter for open-end (not home-secured) credit card accounts,
because the creditor or card issuer can comply with those rules using
information provided by the consumer. This example only relates to
the exception under paragraph (e)(1)(ii) of this section. A creditor
or card issuer may obtain and use medical information for purposes
of Regulation Z’s ability-to-repay or pay determinations pursuant
to other exceptions in paragraph (e) of this section, as applicable.
(7) Example of medical information relating to income
and benefits. 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 non-medical information.
