California Credit Law Worries NAMB

A little-known California law allowing consumers to protect themselves against identity theft by placing a freeze on their credit files has the National Association of Mortgage Brokers worried.With such a firewall in place, consumers must grant written authorization before a credit agency will release their files to a mortgage lender or any other potential creditor. And NAMB officials say that can cause unnecessary delays in the application process. Worse, according to Ginny Ferguson, who chairs the NAMB's Credit Scoring Committee, Fannie Mae and Freddie Mac won't underwrite applications from borrowers who have frozen their credit records because the GSEs are unable to gain access to the files without direct authorization. "This is a bad one," Ms. Ferguson said at the NAMB's annual convention in Baltimore. "It will stop the industry dead in its tracks." Former NAMB president Neill Fendly agreed. "This is going to keep people from getting any type of credit, even credit for a cell phone," he warned. Only 1,000 or so California residents have placed a hold on the credit information since the law took effect on Jan 1, largely because they don't know they can. But the worry is that once the word gets out, many more will do so, and that this method of protecting one's credit identity will be adopted elsewhere. According to the NAMB, Texas is the only other state currently considering such legislation.