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You know, the United States, Mr. Chairman, has the best mortgage finance system in the world. Should Congress decide to dismantle part of this well-operating structure, it will negatively affect the availability and cost of mortgage products in this country. The following are just a few examples.

The cost of credit for consumers will increase as lenders who currently operate under national standards face higher costs to discover and comply with the myriad of State laws. Consumers will have fewer lenders among which to choose as varying non-uniform State laws give rise to regional barriers that will make it difficult to operate nationally.

Innovation in mortgage products will slow, as non-uniform standards set forth in disparate State laws decrease the amount of available consumer information, which is necessary for advancements to better serve the needs of our borrowers. Further, consumers will face a patchwork of protections with inconsistent and fragmented State laws.

The housing market is serving consumers, the mortgage lending industry and the economy well. It is important to note that housing has been a tremendous support to a weak economy in recent years. Failing to reauthorize the standards, uniformity and protections of FCRA would have severe adverse effects on serving our customers and your constituents.

I thank you for inviting the Mortgage Bankers Association to testify, and look forward to answering your questions.

[The prepared statement of John A. Courson can be found on page 79 in the appendix.]

Chairman BACHUS. Thank you.
Mr. Moskowitz?

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WELLS FARGO HOME MORTGAGE Mr. MOSKOWITZ. Thank you, Chairman Bachus, Ranking Member Sanders and members of the subcommittee.

My name is David Moskowitz, and I am general counsel for Wells Fargo Home Mortgage, headquartered in Des Moines, Iowa. Wells Fargo, our parent company, is a diversified financial services company offering mortgage, securities, insurance, real eState services, online banking, institutional and retail banking products under the Wells Fargo brand through a number of separately incorporated affiliates to 15 million customers nationwide. Wells Fargo's headquarters is in San Francisco. The company has 130,000 employees, has mortgage offices nationwide, has a retail banking presence in 23 States.

I thank you for the invitation to testify today. I would like to share with you some of Wells Fargo Home Mortgage's experiences in providing products and services within the framework established by the Fair Credit Reporting Act.

Wells Fargo Home Mortgage works in concert with its other Wells Fargo business affiliates in providing financial service products to its customers. Marketplace experience shows that consumers expect that the financial service companies they do business with to know about their accounts, to respond quickly to their questions and to advise them about products and services that will help them reach their financial goals.

The service consumers expect requires that Wells Fargo have integrated information systems to give consumers what they want, when, where and how they want it. Subject to the Fair Credit Reporting Act, Wells Fargo shares customer information internally to meet these goals.

Providing a new mortgage, refinancing an existing mortgage and meeting our contractual servicing requirements for investors and our customers requires information about their financial affairs. Applying inappropriate restrictions on transfers of information among affiliates would impede customer service.

The 1996 amendments to the Fair Credit Reporting Act recognized the value to customers of the ability to transfer information among affiliates. This ability is wholly consistent with consumers' expectations that their questions will be answered and their needs will be met with a single call or a single e-mail message, whether their financial products are provided by a single company or several companies in the same affiliated group. To put it another way, customers do not care whether for technical, regulatory or management reasons, Wells Fargo chooses to organize itself into a particular series of affiliates of a holding company or subsidiaries of one bank.

What customers do care about is the seamless delivery of the products Wells Fargo offers, regardless of how we choose to distribute them.

In Wells Fargo's view, it is consumer expectations and needs that should shape the public policy that regulates information use, not legal structure. Because of legal requirements that prohibited or restricted bank branching, Wells Fargo, at one time, owned numerous separately incorporated banks. The Riegle-Neal Act of 1994 allowed bank holding companies to consolidate banks into as few as a single charter. Today, for business reasons, rather than legal reasons, Wells Fargo owns 28 separately chartered banks, but the number of separate banks that a holding company chooses to have should not affect public policy relating to information use.

If a bank holding company conducts its banking business in a single bank entity, that bank would have all the information about a customer who had deposits, a mortgage, a credit card, a home equity loan from that bank. As a single corporate entity, it could use this information without restriction to serve its customer.

If, on the other hand, the bank holding company chooses to conduct its mortgage, credit card and home equity loan businesses in three separately incorporated banks, and the law restricted the sharing of information among affiliates, a customer who supplied the same information for the same products at three affiliated institutions, instead of a single institution, would not receive the same level of service from its financial services company.

To use customer information to provide the same level of service that could be provided by a single entity with the same information about the same customer, a holding company like Wells Fargo that provides services through multiple banks and non-bank charters would have to consolidate its operation into as few charters as legally possible.

Because of the uncertainties of the outcome of the FCRA debate, institutions like Wells Fargo will likely change their corporate structures to reduce the number of separate entities, rather than risk restrictions on information sharing among affiliates.

It is our view that corporate structure should not be a factor in setting public policy regarding information use. The touchstone, instead, should be consumer expectation. This is especially critical to our mortgage business.

Since passage of the 1996 amendment to the Fair Credit Reporting Act, mortgage servicing has become more efficient. Wells Fargo customers have more channels through which they can apply for a mortgage and get assistance or conduct transactions related to a mortgage, as well as a complete array of financial products offered by Wells Fargo. With affiliate transfers and use of customer information, mortgage customers can make a mortgage payment at their local bank branch, obtain balances, get consolidated statements and get the support of 24-hour call centers that serve an entire affiliated enterprise.

It is our goal to provide seamless service and product advice to customers no matter which member of the Wells Fargo family of companies provide the particular product or services.

With the FCRA framework, companies can do a better job of evaluating credit and market risks. This translates into better and lower cost service to customers. Wells Fargo can offer a variety of mortgage service and products, such as quick turn-around on refinancing, discounts on closing costs for signing up with Wells Fargo's product line, referrals for new homeowners and alternative financing options for customers.

Finally, Wells Fargo believes the current uniform national standard for information use, as provided by the 1996 amendments to the FCRA, is vital, and asks that this Congress provide clarity and stability by removing the sunset provisions that affect affiliate sharing and other segments of credit granting.

Congress should also address identity theft and should grant authority to bank regulators to set new national standards for notices about information use to customers. The problem of identity theft and complicated notices about information use are frustrating to both customers and financial service providers. The availability of financial services, such as mortgages, for our customers and the flow of information required to make those services available, do not stop at State borders or corporate structures.

Thank you. And I would be happy to answer any questions that you, Chairman Bachus, or the subcommittee may have.

[The prepared statement of David Moskowitz can be found on page 167 in the appendix.]

Chairman BACHUS. Thank you, Mr. Moskowitz.
Mr. Pickel?


Mr. PICKEL. Chairman Bachus, Congressman Sanders, and members of the committee, I am A.W. Pickel, president-elect of the National Association of Mortgage Brokers, and president of Leader Mortgage Company in Lenexa, Kansas.

I appreciate the opportunity to present NAMB's views on the Fair Credit Reporting Act. NAMB is the nation's largest organization exclusively representing the interests of the mortgage brokerage industry, and has more than 14,000 members. Thank you, really. I appreciate it, for having us here.

I I want to commend this committee for holding a series of hearings on an issue that is vital to our economy and to consumers. FČRA, as amended, provides a carefully constructed balance, which creates uniform national standards that have increased the effectiveness of consumer report information.

This national uniform standard impacts nearly every business sector that makes consumer credit-related decisions. It is also essential to the operation of our current mortgage industry. As it is estimated that mortgage brokers originate more than 60 percent of all the residential mortgages, NAMB is very concerned of the impact changes to FCRA may have on the mortgage marketplace and the economy, in general.

FCRA has facilitated the information that is provided by consumer reporting agencies, which is mandatory to make sound mortgage lending decisions and to help evaluate risk. This information is essential in order for the mortgage industry to provide consumers with access to credit and reasonably priced products. A carefully constructed balance in FCRA creates the ability to make quick decisions on offers of credit that is critical to both consumers and mortgage originators. It also creates competition, which helps to lower credit costs for consumers.

NAMB believes the extension of the preemption provisions are necessary to preserve a national uniform standard, some of which I will address today. If Congress allows the preemption provisions in FCRA to expire, the outcome of such inaction will increase risks and costs for mortgage originators, and as such, will have a detrimental impact on a consumer's access to credit and availability of mortgage products.

Applying for a mortgage was a very time-consuming process before the carefully constructed balance of FCRA was created. Processing a mortgage application required personal contacts with references, other creditors and contact with individuals who had knowledge of a consumer's personal finance history.

Now, consumers can gain access to credit virtually instantaneously on a wide array of credit products.

The information contained in a consumer report is an essential component to the mortgage process. It dictates the terms and rates for a consumer's mortgage. If States are allowed to enact inconsistent laws regarding what information can and cannot be contained in a consumer report, the ability for mortgage originators to determine a consumer's credit risk will be compromised.

Accurate reports benefit not only the consumer, but also the mortgage broker and the lender, who are able to make more rapid and accurate credit decisions utilizing these scoring models when underwriting a mortgage loan. The lack of a national standard on the contents of a consumer report would add a level of uncertainty in the risk profile of the consumer's credit history. As a result, the

price of credit will increase for all consumers, and access to credit will be reduced, which could result in a reduction in our country's historically high homeownership rate, something that NAMB is very proud of.

Uniform adverse action notices provide a consumer with consistent information regardless of their location. If this preemption provision expires, an adverse action notice may differ from State to State. This could result in confusion to consumers and a significant increase in operational costs to the industry, from which consumers will suffer the consequences.

Mortgage brokers generally do not furnish information to consumer reporting agencies. However, the lenders with which mortgage brokers transact business and many other industry sectors do furnish information to consumer reporting agencies. If States are allowed to enact inconsistent laws regarding furnisher requirements, furnishers may decide that compliance with different State laws is too burdensome and may choose not to submit the information at all, making consumer reports both inaccurate and unreliable.

Finally, we also think that the procedures for disputing inaccurate information need to maintain uniformity. Inconsistent investigation time restrictions would lead to a cursory and inaccurate investigation to the detriment of consumers. Mortgage brokers often work with consumers to help them to review and correctly dispute items on their credit report, when necessary to obtain the most rapid modifications necessary to obtain the best mortgage for them. Cursory and inaccurate investigations of credit disputes will frustrate this working relationship between a mortgage broker and their consumer.

NAMB believes it is important that Congress maintain our current uniform credit system, which has provided the economy with strong benefits and protections and has enabled millions of consumers to obtain the dream of home ownership.

Thank you very much for the opportunity to testify here today.

[The prepared statement of A.W. Pickel can be found on page 174 in the appendix.]

Chairman BACHUS. Thank you, Mr. Pickel.
Mr. Plunkett, we welcome your testimony.


DIRECTOR, CONSUMER FEDERATION OF AMERICA Mr. PLUNKETT. Good morning, Chairman and Ranking Member Sanders.

My name is Travis Plunkett. I am the legislative director of the Consumer Federation of America. Thank you very much for the opportunity to offer our comments on the important issue of the role of the Fair Credit Reporting Act in the granting of mortgage loans.

I have three main points I will touch on today.

First, accuracy and completeness of information about consumers' credit history is the very foundation on which the entire credit reporting system is built. And that foundation is shaky. We agree that there have been positive effects to the automation of credit reporting over the last 15 years, but broad and credible evi

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