NAMB Raps Credit Freeze Laws

Mortgage brokers are growing increasingly concerned about state laws that give consumers the ability to place a freeze on their credit files.Allowing people to block creditors from viewing their credit histories is seen as a way to protect the privacy of consumers and guard against identity theft. But officials of the National Association of Mortgage Brokers warned at their annual convention in Minneapolis that legitimate lenders will be unable to generate credit scores for borrowers who freeze their files, and that could hinder their ability to buy their favorite house or obtain a preferential interest rate. "Most Realtors insist on formal credit approval with 10 days, but we don't have 10 days if we have to fiddle" with unfreezing a file, said Pleasanton, Calif., broker Ginny Ferguson, an expert on credit scoring. Assuming a borrower even remembers he froze his credit files or can find his PIN, it can take five days or more just to "thaw" a file, Ms. Ferguson said. And if the consumer can't find his ID number, the process can take much longer. Just two states -- California and Texas -- allow their citizens to block access to their credit files, but similar laws will soon become effective in Vermont, Louisiana, and Washington, and dozens of other states are considering legislation. But Ms. Ferguson said well-meaning lawmakers "don't understand the mechanics of what they are trying to do." Rather than protect consumers, she said, the laws will only serve to "gum up the works."