H.R. 9380: Expanding Access to Credit through Consumer-Permissioned Data Act

This bill would change federal mortgage-lending rules so that, when a person applies for a mortgage, the lender would have to take certain additional credit-related information into account if the applicant asks for it and gives permission for it to be used.

What information could be used

The bill focuses on credit information that is not reported through the major nationwide consumer reporting agencies. Examples given in the bill include:

• Bank statement data
• Rental payment history
• Other current payment and transaction information of a type the lender would normally consider if it were reported through a credit bureau

When lenders would have to consider it

A lender making a mortgage loan would have to consider this extra information only if the applicant:

• Requests that the lender consider it,
• Authorizes it to be shared with the lender, and
• States that the regular credit reports do not fully or accurately reflect the applicant’s creditworthiness without it.

How lenders would have to treat the information

If the information is provided under the bill, the lender would have to treat it the same way and give it the same weight as it would if the same information had come from a consumer reporting agency. The lender could ignore it if it reasonably determines that the information was materially misrepresented, subject to rules set by the Consumer Financial Protection Bureau (CFPB).

New notice requirement

Lenders would have to give mortgage applicants a notice explaining:

• The applicant’s right to authorize use of additional credit information,
• Examples of the kinds of information that could be used,
• Potential benefits of providing it, and
• That the lender may disregard the information if it believes the information was materially misrepresented.

These notices would need to be available in the 8 most commonly spoken languages among people with limited English proficiency, as determined by CFPB using Census data. CFPB would also have to create standardized form language for the notices.

Effect on automated underwriting systems

The bill would also require anyone who develops or maintains a mortgage underwriting system, including federal agencies that support federally backed mortgage loans, to make sure the system can handle this kind of consumer-permissioned data. CFPB, working with other federal housing agencies, could issue rules to make automated systems capable of using this information.

Rulemaking and timing

CFPB would have to issue final rules within 18 months after the bill becomes law. The new requirements would take effect when those final rules take effect.

Relevant Companies

• FNMA - Fannie Mae could be affected because its mortgage underwriting systems and related guidance may need to incorporate consumer-permissioned alternative credit data.
• FMCC - Freddie Mac could be affected for the same reason, since its mortgage underwriting tools and standards may need to accommodate these data sources.
• FICO - Credit scoring and underwriting products may face indirect effects if lenders rely more on nontraditional data alongside or instead of traditional credit report information.