Washington, D.C. (June 30, 2003) — The National Association of Realtors® praised President Bush and Treasury Secretary John Snow for the plan unveiled this afternoon to strengthen the consumer credit protections available under the Fair Credit Reporting Act (FCRA). NAR strongly backs the administration's proposals to provide consumers with one free credit report per year and to give consumers information as to how their credit scores were derived, how they can improve them and how they can correct any errors in their credit files.

"A consumer's credit score has become increasingly crucial to that person's ability to obtain the necessary mortgage financing and homeowners' insurance to buy a home," said NAR President Cathy Whatley, owner of Buck & Buck Inc. in Jacksonville, Fla. "The nation's Realtors® applaud the Bush administration for their proposal to protect consumers' access to their personal financial information and to combat identity theft. We stand ready to work with Congress and the administration to make it easier for consumers to review their credit profiles, improve their credit scores and correct any errors that could prevent them from buying the home of their dreams. NAR has long supported strong consumer credit protections and greater transparency in the homebuying process."

NAR supports amending the FCRA, which is up for reauthorization this year, to require greater consumer disclosures on credit and insurance scores; shortened time frames for consumer reporting agencies to investigate and correct consumer credit reports; stronger penalties for entities that repeatedly provide incorrect information to consumer reporting agencies; and fairer treatment of consumers' multiple shopping inquiries for the best mortgage or insurance rate.

Mortgage lenders and insurance companies are increasingly using credit-scoring models to determine whether to lend or offer homeowners' insurance to prospective homebuyers. Credit scores have become crucial not only to a consumer's ability to secure a mortgage, but also to a consumer's ability to obtain homeowners' insurance, without which he or she cannot obtain mortgage financing.

NAR recently convened an Insurance Task Force to examine the availability and affordability of homeowners' insurance in response to complaints from Realtors® that the lack of homeowners' insurance has become an obstacle to homeownership.

In a letter delivered to members of the U.S. House and Senate earlier this month, Whatley explained that "consumers are experiencing delayed or cancelled home settlements due to the unavailability of affordable insurance." A recent study conducted by the Independent Insurance Agents and Brokers Association of America found that nearly 2.5 million consumers lost their homeowners' insurance over the last 24 months.

NAR's Insurance Task Force found that the increasing use of scoring models by insurers and others has created unintended consequences for consumers. "Because consumer databases have grown and their uses have widened, accurate consumer information is essential to both individuals and businesses," Whatley said. "It has been long standing policy at NAR to promote transparency in the mortgage and home-buying process."

"These amendments would assist consumers in discovering and correcting inaccurate information, and aid their ability to compile complete and truthful consumer profiles," she explained. "Since it is the consumer's information that is being compiled, that person should not have to pay to review it for accuracy. Public policy should provide an incentive to consumers to monitor their consumer reports."

Published: July 1, 2003

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