The San Francisco Chronicle
New consumer help with credit reports
By: Kathleen Pender
October 22, 2012
Starting this week, consumers who have trouble getting mistakes in their credit reports corrected or have other problems with credit bureaus can file a complaint with the Consumer Financial Protection Bureau.
The CFPB will help consumers resolve issues with credit reporting agencies, also known as credit bureaus or consumer reporting agencies. These include the big three - Equifax, Experian and TransUnion - and some smaller companies.
The CFPB says it will help consumers resolve issues such as incorrect information on a credit report, improper use of a credit report, inability to get a credit report or credit score, and problems with credit monitoring or identity protection services.
To preserve consumers' rights under the Fair Credit Reporting Act, they should file a complaint with the credit bureau first and get a response before filing one with the CFPB.
The bureau gained authority on Sept. 30 to supervise consumer reporting agencies with more than $7 million a year in revenues. This includes about 30 companies that account for 94 percent of the industry.
This is the first time a federal agency has been able to provide individual assistance to consumers with credit bureau problems. Previously, the Federal Trade Commission had jurisdiction over the Fair Credit Reporting Act and could file lawsuits or other enforcement actions against credit bureaus that violated the law.
But it did not supervise credit bureaus - or have the ability to examine their procedures and write regulations. The CFPB does have that authority and shares enforcement of the act with the FTC.
"We think it's the level of regulation the credit bureaus always should have had, because they are so vital to the economic lives of Americans," says Chi Chi Wu, an attorney with the National Consumer Law Center.
When a consumer disputes information in a credit report - such as a late payment or bankruptcy - the lender that provided the information and the credit bureau are required to conduct a "reasonable investigation" to determine its accuracy and, if it's wrong, correct it.
The credit bureau typically "boils the complaint down to a code, beams the code to the creditor and they do a mindless data comparison. The courts have said you cannot do just a mindless comparison of data; you have to do more. But they continue to do a mindless comparison," says Evan Hendricks, author of "Credit Scores and Credit Reports."
"Clearly, the presence of another cop on the beat can only help. It's possible and even likely that if someone complains to the CFPB (the consumer) might get action," Hendricks adds.
The bureau previously began taking complaints about mortgages, bank accounts, consumer loans and private student loans. From July 21, 2011, through Sept. 30 of this year, it received roughly 79,200 gripes about these products.
When it gets a complaint, the bureau makes sure the consumer is a customer of the company. It then forwards the complaint to the company, which has 15 days to make a "substantive response" to the bureau. Companies generally are expected to close complaints within 60 days.
The bureau says it will "prioritize for individual investigation" complaints that are not closed in a timely manner and resolutions that the consumer disputes.
The bureau says 82 percent of complaints received as of Sept. 30 have been sent to companies for review and response, and of those, companies have responded to about 94 percent.
Eminent domain: Is the idea of using eminent domain to seize underwater mortgages losing steam?
A consortium in San Bernardino County that was the first to publicly consider the idea was supposed to meet Thursday, possibly to review and maybe even issue requests for proposals.
But it canceled the meeting and is not scheduled to meet again until Jan. 24.
The Homeownership Protection Program Joint Powers Authority - formed by the San Bernardino County and the cities of Fontana and Ontario - canceled its meeting because it could not get a quorum. "It became apparent last week that enough members had scheduling problems," says David Wert, a spokesman for the county.
The authority was formed to publicly consider a program sponsored by San Francisco's Mortgage Resolution Partners. The original plan called for having local governments use eminent domain to seize underwater but performing mortgages out of private-label securities. The city would pay fair market value, then refinance the mortgages at the home's current market value. Mortgage Resolution would collect a fee and find private investors to fund the purchase of the mortgages.
Since then, other groups have approached the authority with ways to help underwater homeowners, some of which involved eminent domain.
There was no agenda for this week's meeting, but the only thing the authority could have done was review a draft request for proposal and at most, issue the request to all interested groups, Wert says.
The authority's chairman - San Bernardino County chief executive Greg Devereaux - could schedule a meeting before the group's next quarterly meeting in January. He did not return my call, and Wert could not say if that's likely.
"It's a bit unusual not to get a quorum for a scheduled meeting, but it highlights the difficulty of moving forward with any eminent domain program," says Tom Deutsch, executive director of the American Securitization Forum, one of many financial groups opposing the plan.
Other cities - including Oakland and Berkeley - have expressed interest in the idea, but none is as far along as San Bernardino.