If the lender denies credit on the basis of information contained in a consumer credit report, they must disclose this to the consumer, indicating that the consumers credit report was relied on. The name, address and toll free telephone number of the consumer agency that provided the information must also be included. If the consumer disagrees with any of the information contained in the credit report, he or she must contact the consumer reporting agency directly to initiate any dispute procedures.

If the lender denies credit on the basis of information from a source other than a consumer reporting agency (e.g., based on information contained in an appraisal), this must be disclosed to the applicant and information sent to the applicant of his or her right to file a written request for the information within sixty days of receipt of the denial. Upon written request, the lender must disclose to the consumer the nature of the third party information upon which the adverse action was based.

Lender adverse action letters, which also satisfy the Equal Credit Opportunity Acts requirement for notification of adverse action, have been drafted to include these disclosures when applicable.

In addition to requiring a creditor to disclose all of the costs of the credit to the borrower, this regulation requires a creditor to allow a borrower a three day cooling off or rescission period after a transaction involving the borrowers primary residence has closed. This period allows the consumer a chance to cancel or rescind the transaction at no cost to the borrower, prior to the recording of the mortgage/deed of trust. This rescission right generally applies to non-purchase transactions involving the borrowers primary residence.