New Federal Database Will Track Americans' Credit Ratings, Other Financial Info

schwit1 (797399) writes "As many as 227 million Americans may be compelled to disclose intimate details of their families and financial lives — including their Social Security numbers — in a new national database being assembled by two federal agencies. The Consumer Financial Protection Bureau posted an April 16 Federal Register notice of an expansion of their joint National Mortgage Database Program to include personally identifiable information that reveals actual users, a reversal of previously stated policy. The FHFA will manage the database and share it with CFPB. A CFPB internal planning document for 2013-17 describes the bureau as monitoring 95 percent of all mortgage transactions. FHFA officials claim the database is essential to conducting a monthly mortgage survey required by the Housing and Economic Recovery Act of 2008 and to help it prepare an annual report for Congress."

Comments

the Putin stage

[Anonymous Coward]

The point where your oligarchs completely stop pretending you have any democratic say in your country.

Re:the Putin stage

[x0ra]

btw, YES, I do believe that the whole mortgage crisis was caused not by banks, who merely provide a tool, but by the people with bad credit history thinking they can buy the american dream.

Re:the Putin stage

[ebno-10db]

i agree that its not the banks fault.

So a bank that hands somebody a few hundred thousand dollars without due diligence is not at fault?

While we're at it, what changed? I got my mortgage in 1999, and it came with all sorts of things beyond (a largely meaningless) credit check, like past tax returns showing level and continuity of income, disclosure of other debt, and all sorts of sniffing up my butt even though I have an honest face. What suddenly made banks so trusting? (hint: look up CDO's, CDS's, and all sorts of other three letter scams that were popular around 2000-2008).

i agree that its not the banks fault. Its the people who bought the homes, but its also the governments fault for mandating banks make the loans

Ah, the CRA red herring. Passed in 1977, but magically took 30 years before it had any ill effect.

Re:the Putin stage

[ganjadude]

I believe there were changes made in the 90s that mandated banks give out more loans

Re:the Putin stage

[geekoid]

And that wasn't even the real problem. the collapse happened becasue there where taking c/d/f loan and bundling them up with A loans and calling the whole package an 'A'
And we are talking abut millions of loans being resold.

The collapse would never have happened if banks where forced to sit on a loan the made for 5 years.

Re:the Putin stage

[CrimsonAvenger]

No, actually it doesn't.

There's a whole section of the Constitution concerning Congressional Powers (and another for Executive Powers).

And then there's the "if we didn't mention it, it's a prerogative of the States of the People" part (10th Amendment.)

Re:the Putin stage

[Dahamma]

Exactly, this is idiotic. You submit MUCH more financial information than this to the government every year.

Honestly credit ratings are one area that the government may be the *right* organization to control. The current credit agencies are for-profit businesses that have very little interest in keeping your information accurate (or investigating shady companies who try to use your credit rating as extortion) and you have very little recourse to fix their mistakes.

Re:the Putin stage

[pr0t0]

Then you haven't put much thought into it. People with bad credit history (or good) are utterly incapable of forcing a bank to lend them money. The decision to lend money for a mortgage is at the sole discretion of the lender. They alone decide if the credit-worthiness of the borrower justifies the loan. They created the sub-prime packages for investors in hedge funds, and they alone then bet against those packages...YES, the very packages they created! The government didn't force them to make those loans. That whole thing was built as an investment vehicle by the banks, allowing wealthy Americans to purchase the debt owed on sub-primes with higher interest rates, thus higher ROI. And everyone ate it up: the investors, the lenders, and the least qualified to know what the hell was going on...the borrowers.

I witnessed this shady practice first-hand as a first-time home buyer (my credit was fine though). I went to a broker and told him what I could comfortably afford for a mortgage payment (including taxes, insurance, etc.). I asked, based on that figure how much can I offer on a house. He gave me an amount, and I went house shopping. I found a home, made an offer, and he came back with a mortgage payment that was 25% more than what I said I could afford. Needless to say, I was pissed and told him off. 25% isn't a lot when you are talking about dinner, but it's hundreds, maybe thousands of dollars when talking about a mortgage. When I stopped the deal, the real estate agent called the broker to find out what was going on. He told her that he didn't know what the problem was...I was approved, I just didn't like the price. That in itself is telling. They approved me for a loan that was well in excess of what I already told them I could comfortably afford. Then the real estate agent, a licensed realtor mind you, told me that since I made the offer I was legally bound to honor it (total bullshit).

It may be more cleaned up now, but back in 2007, I think everyone involved in real estate became a con artist drunk on the promise of easy riches. I of course cannot speak to the motives of every person who got a sub-prime mortgage loan, but blaming people with bad credit for that crisis feels a lot like blaming the victims. It's possible these people, knowing their financial straights, would have never even considered buying a home. But here comes a letter from First National Never Trust telling them, "Hey, it's not as bad as you think!. You can OWN your house for just a bit more than you're paying in rent." And they trot out spreadsheets and graphs to back up that claim. So the financially challenged are thinking, "Wow, I had no idea! Sure!". You can buy that mail list you know. Give me every person in the United States who pays rent and has a sub-650 credit rating (or whatever the number). They're ambulance chasers.

And you want to blame the borrower for that? Wow. That's just willful ignorance; a total lack of understanding that companies, like people, need to take responsibility for their actions; and a complete lack of empathy for people being emotionally prayed upon by those companies.

Please, get off my planet.

Credit rating databases aren't new

[Anonymous Coward]

As opposed to the private credit rating agencies that have all your personal credit information with zero transparency and accountability?

I'd rather this be in the public sphere where hopefully the agency has my interests at heart, rather than some private, for profit corporation.

Of course I live in Soviet-Canuckastan, so my opinion may differ from my "freedom loving free marketer loving" cousins to the south...

Re:Credit rating databases aren't new

[Connie_Lingus]

hate to burst your utopian-bubble, but the last time i checked, in world history Government has caused, roughly, about a bazillion times more pain and sufferings than any corporation could ever even begin to conceive of.

i can't get my head around this "trust the government" meme..."government" is nothing but a group of busybody people (yes the same type of people who work in corporations, and at taco bells, and everywhere else btw) who crave power and use personality and politics, NOT merit or compassion, to secure their base and influence and really care much less about your personal miseries and stresses then the typical corporate executive does.

its bad business to anger and kill your customers, governments rarely care about that sort of stuff, esp. they get in the way of maintaining their power over you and your life.

at least corporations have to compete for your blessings, and can pretty easily be displaced.

Mortgages are public records

[Animats]

Mortgages are public records. State and local governments already have all that data. Anyone can look it up. Data companies have already collected it for most parts of the US and use it for marketing.

The Consumer Financial Protection Bureau is only going to have a 1 in 20 sample of the data. That's enough to look for improper activity by lenders. There's a lot of funny stuff going on in the foreclosure area, but nobody has been analysing that as a "big data" problem.

Re:Mortgages are public records

[PPH]

Mortgages are public records.

Most are. Some are not.

Some (wealthy) people conduct property transactions partially or entirely as private contracts. Back when I was in a business involving engineering in public right-of-ways, many county property records just described transactions as "for the price of $20 and other valuable considerations". Often for multi-million dollar waterfront lots. And then there's property which is held by a corporation, where the records of transfer (unregistered securities not available to the general public) will never be a matter of public record.

But these sorts of transactions are beyond the authority of the FHFA and CFPB. And that is by the design of the parties involved. So, in one sense, who cares? The common folk (who need consumer protection) are already a matter of record and the rich don't want/don't need the government meddling in their affairs.

Problems arise when parties at the margins of the public/private transaction decision look at this new body of law and push their decision over to the private side. I don't care about the mortgage fraud issue so much. But there is already a massive amount of property value that is 'off the books' and not contributing to local tax bases. And this sort of nonsense will just make it worse.

It's more than mortgages.

[TigerPlish]

According to TFA:

Late car payment? It'll be recorded.

Late creditcard payment? Skipped a child support payment? Forgot to pay the water bill? It'll be recorded. Or so TFA says.

The database will also encompass a mortgage holderâ(TM)s entire credit history, including delinquent payments, late payments, minimum payments, high account balances and credit scores, according to the notice.

Really?! "high account balances?!"

The composition of your family? Feast your eyes on this little nugget FTFA:

The two agencies will also assemble âoehousehold demographic data,â including racial and ethnic data, gender, marital status, religion, education, employment history, military status, household composition, the number of wage earners and a familyâ(TM)s total wealth and assets.

Folks.. it *is* big brother. People are focusing on only the mortgage aspect, but if TFA is to be believed, it's a financial dragnet.

What the fuck are they looking for? People spending large sums on strange things?

It won't be for bureaucratic purposes. This will get tied in with law enforcement somehow. That's just my gut feeling, folks... but I do really think LEOs will want in on this.

"Mr Smith, we'd like to have a word with you.. every two weeks you withdraw $100 cash, then as you can see in these pictures, the city's automated license plate readers catch you visiting the address of a known marijuana dealer every time you make that withdrawal. Please step into the van, sir."

It's coming. Maybe not for a bag of sweet leaf, but surely for other things.

2001 was the year the US ended. We sold out to the Gov't and did so willingly; because Terrorism!, because Think of the Children, because War on Drugs! But mainly because Terrorism.

To hell with the federal government, might as well call it the Reich now.

Parts of Left and Right will be against this

[davidwr]

I expect the Tea Party and libertarian-leaning Democrats to be up in arms about this.

I expect "business Republicans" and non-libertarian Democrats to see this as A Good Thing or at least a "neutral thing, but serving a good purpose" thing.

Let the sparks fly.

Settle Down...

[Hangtime]

Full Disclosure: Worked at one of the money center banks in both Small Business and Credit Cards for six years and a foreign bank with a US presence for 4.

What is this thing and do I need to get my foil hat?

The database they are constructing is being used to conduct performance reviews on originated mortgages. The database won't pick you up unless you start a mortgage. Once you originate the mortgage this database is being put into place in order to monitor your performance on that mortgage and your corresponding financial condition.

Why are they doing this?
To stop the next credit crisis as the system would allow surveillance over mortgages originated by banking institutions. Today, banking regulators have broad powers to request information out of banks including everything that's going to be held in this database (personal information about you, you bet - your bank is pulling regular credit reports on you and the regulator can check your progress when they come in for an exam. Building the database would shortcut that request and help get a better view as to how institutions are originating. No longer would regulators have to show up and start poking around at a bank, but they could monitor the health of the banks portfolio.

Who would be against this? This sounds like a way to crack down on banks.
It is a way to crack down on banks and ensure that what's being originated isn't crap. Think about it. We could have better monitored the health of the entire mortgage system by have having this database in place. Those who are against this are most likely those who have a vested interest in ensuring that the mortgage industry opaque to regulators. Those concerned about privacy should realize all of this data is being collected today, I can pull your credit report and cross it with data from CoreLogic and do roughly the same thing. Yes it is all in one place and with a government entity, but so long as its being used responsibility I don't have a problem with it as it would create an excellent tool for finding bad actors within the mortgage industry.

Don't forget the 9th Amendment

[Anonymous Coward]

It's so very sad that most Americans have never READ the Constitution. They're all so very certain the things they WANT are "constitutional" and the things they don't want others doing are "unconstitutional" but most are clueless because they've never even bothered to READ it. This nation would not be in so many of the messes it's in right now if we had simply folowed the document. It's not like reading it would take any real effort; it's written in English, and unlike "War and Peace" or "Atlas Shrugged" the founders wrote it on FOUR (big) pages.

For those too lazy to look it up... the ninth ought to make LIMITED federal government very clear even before you get to the 10th:

"The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people."

The entire POINT of the Constitution was to create a small VERY LIMITED federal government with specific limited powers and responsibilities and leave the rest to the states and the people. It says this over and over again and re-states it in the 9th and 10th Amendments within the Bill of Rights. This is contrary to the desires of most politicians, bureaucrats, lawyers, investment bankers etc so they've packed the government, including the courts, with people who don't give a damn about their oaths or the Constitution and who will legislate and rule in whatever way benefits them.