The lending process could slow appreciably in the next few months as more and more consumers begin taking advantage of a new federal law allowing them a once-a-year free peak at their credit reports.

Under revisions set to roll out on a regional basis over a nine-month period beginning Dec. 1, anyone with credit can ask each of the three major credit repositories for a copy of their report so they can make sure their files do not contain erroneous information.

While the intention is laudable, Virginia "Ginny" Ferguson, a Northern California loan broker and an acknowledged expert on mortgage credit, warns that it "could overload the system" and slow mortgage approvals to a crawl. She also worries that it could drive up the cost of credit reports.

Typically, a home buyer's credit report is pulled twice during the approval process, once when the purchaser applies for the loan to make sure the would-be borrower is a good risk and again a few days before closing to be certain the approved borrower's credit situation has not changed.

But considering the fact that 160 million Americans have documented credit information, three million credit reports are pulled each year, and half of all reports result in disputes, Ferguson says overloading the system with free reports could force lenders to wait in line with everyone else.

The 23-year mortgage industry veteran, a past vice president of the National Association of Mortgage Brokers and a previous chair of the group's credit scoring committee, also is concerned that the free reports will contain a credit score that will almost certainly differ from the one mortgage loan officers get when they pull a client's credit report.

It's not a credit score in the traditional sense, warns the co-owner of Heritage Valley Mortgage in Pleasanton. "It's not a classic credit score that's used by lenders. It's not industry-specific. It's not a so-called 'FICO' score," she says, noting that consumers could see as much as a 35-point dip if and when they apply for a mortgage.

That's enough of a drop to push some buyers into paying higher than expected interest rates, or force them out of the market altogether.

Published: October 27, 2004

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.