Expanding Access to Credit through Consumer-Permissioned Data Act
Bill: H.R.8485 | Sponsor: Rep. Williams, Nikema (D-GA)
Policy area: Finance and Financial Sector

Summary:
Expanding Access to Credit through Consumer-Permissioned Data Act
This bill requires the consideration of additional credit information by a mortgage lender when evaluating a consumer's creditworthiness if a consumer requests that this information be considered. This additional information includes current payment and transaction information such as bank statements and rental payment history.
Mortgage lenders must provide notice to mortgage applicants of their rights under this bill.
Additionally, federal agencies that insure, guarantee, supplement, assist, or underwrite federally backed mortgage loans must also comply with these requirements.

To amend the Equal Credit Opportunity Act to require creditors to 
  consider certain additional credit information when making mortgage 
                     loans, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Expanding Access to Credit through 
Consumer-Permissioned Data Act''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) Using alternative data in mortgage lending (either 
        through alternative credit scores or in underwriting) has the 
        potential to increase access to credit for individuals with 
        little or no credit history with the national credit reporting 
        agencies (NCRAs), according to a review of alternative data use 
        in mortgage lending by the Government Accountability Office in 
        December 2021.
            (2) Approximately 45 million consumers do not have any 
        credit history with the NCRAs or did not have enough credit 
        history to be scored, according to a 2015 report by the Bureau 
        of Consumer Financial Protection (CFPB), entitled ``Data Point: 
        Credit Invisibles''. The CFPB also reported that this 
        population disproportionately included low-income consumers, 
        younger consumers, and consumers of color.
            (3) The use of alternative data to establish a low- or 
        moderate-income borrower's credit history for the purpose of 
        extending mortgage credit can help lenders meet goals of the 
        Community Reinvestment Act.
            (4) Mortgage underwriting systems that allow lenders to use 
        consumer-permissioned alternative credit information may help 
        expand access to mortgages for borrowers with lower credit 
        scores and communities of color. On September 21, 2021, Fannie 
        Mae updated its automated underwriting system so that it 
        notifies lenders that a borrower may benefit from the inclusion 
        of consistent rental payment information, and with the 
        consumer's permission, the underwriting system will 
        automatically identify rental payments within bank statement 
        data and include this in its credit assessment. According to a 
        fair lending and credit risk analysis by Fannie Mae and the 
        Federal Housing Finance Agency, the populations most likely to 
        benefit from this change are applicants with lower credit 
        scores, who are disproportionately consumers of color.

SEC. 3. REQUIREMENT TO CONSIDER ADDITIONAL CREDIT INFORMATION WHEN 
              MAKING MORTGAGE LOANS.

    (a) In General.--The Equal Credit Opportunity Act (15 U.S.C. 1691 
et seq.) is amended by inserting after section 701 the following:
``Sec. 701A. Requirement to consider additional credit information when 
              making mortgage loans
    ``(a) In General.--A creditor extending a mortgage loan shall, in 
evaluating the creditworthiness of an applicant, consider credit 
information not reported through a consumer reporting agency, if--
            ``(1) the applicant--
                    ``(A) requests such consideration;
                    ``(B) authorizes the provision of the credit 
                information to be considered; and
                    ``(C) states that the applicant does not believe 
                that credit information reported through consumer 
                reporting agencies fully or accurately reflects the 
                applicant's creditworthiness in the absence of such 
                information; and
            ``(2) the credit information relates to the types of 
        information that the creditor would consider if otherwise 
        reported and includes current payment and transaction 
        information, such as bank statement information or rental 
        payment information.
    ``(b) Treatment of Additional Information.--A creditor shall treat 
any information provided pursuant to subsection (a) in the same manner 
and with the same weight as the creditor would treat the same 
information if it were provided by a consumer reporting agency, as 
defined through regulations by the Director of the Bureau of Consumer 
Financial Protection, unless the creditor reasonably determines that 
the information is the result of a material misrepresentation, 
according to regulations provided by the Director of the Bureau.
    ``(c) Notice to Applicants.--
            ``(1) In general.--A creditor described under subsection 
        (a) shall provide each applicant for a mortgage loan with a 
        notice that includes--
                    ``(A) an explanation of the applicant's right under 
                this section to authorize the provision of additional 
                credit information to the creditor for consideration, 
                including examples of such additional information, as 
                well as the benefits of providing such information; and
                    ``(B) the right of the creditor to disregard any 
                such information if the creditor determines, according 
                to regulations provided by the Director of the Bureau, 
                that the information is the result of a material 
                misrepresentation.
            ``(2) Notice languages.--Notices required under paragraph 
        (1) shall be made available in each of the 8 languages most 
        commonly spoken by individuals with limited English 
        proficiency, as determined by the Director of the Bureau using 
        information published by the Director of the Bureau of the 
        Census.
            ``(3) Form language.--The Director of the Bureau shall 
        establish form language, which shall be used by each creditor 
        when providing the notices required under this subsection, 
        providing--
                    ``(A) the examples described under paragraph 
                (1)(A);
                    ``(B) the description of the benefits described 
                under paragraph (1)(A); and
                    ``(C) the non-English language versions of the 
                notices described under paragraph (2).
    ``(d) Consideration of Alternative Data.--A creditor shall ensure 
that the alternative data provided under the requirements of subsection 
(a) shall be considered as part of the decisioning process.
    ``(e) Treatment of Underwriting Systems.--
            ``(1) In general.--Any person, including any Federal agency 
        that insures, guarantees, supplements, or assists a Federally 
        backed single-family or multifamily mortgage loan, who develops 
        or maintains an underwriting system for mortgage loans shall 
        ensure such system complies with the requirements described 
        under subsection (a).
            ``(2) Rulemaking.--The Director of the Bureau (in 
        consultation with the Director of the Federal Housing Finance 
        Agency, the Secretary of Housing and Urban Development, and any 
        other Federal agency that insures, guarantees, supplements, or 
        assists a Federally backed single-family or multifamily 
        mortgage loan) may issue such regulations as, in the judgement 
        of the Director, may be necessary to capture consumer-
        permissioned data in automated underwriting systems.
    ``(f) Consumer Reporting Agency Defined.--In this section, the term 
`consumer reporting agency' has the meaning given that term under 
section 603 of the Fair Credit Reporting Act.''.
    (b) Clerical Amendment.--The table of contents for the Equal Credit 
Opportunity Act is amended by inserting after the item relating to 
section 701 the following:

``701A. Requirement to consider additional credit information when 
                            making mortgage loans.''.
    (c) Rulemaking; Application Date.--Not later than the end of the 
18-month period beginning on the date of enactment of this Act, the 
Director of the Bureau of Consumer Financial Protection shall issue 
final rules to carry out the amendments made by this section, and such 
amendments shall apply to creditors on and after the effective date of 
such final rules.
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