FDIC Federal Register Citations

From: Thomas Linke

Sent: Friday, December 28, 2007 2:58 PM

To: Comments

Subject: Public Submission

Public Comments on Interagency Notice of Proposed Rulemaking: Procedures To Enhance the Accuracy and

Integrity of Information Furnished to Consumer Reporting Agencies Under Section 312 of the Fair and Accurate Credit Transactions Act:

Title: Interagency Notice of Proposed Rulemaking: Procedures To Enhance the Accuracy and Integrity of Information Furnished

to Consumer Reporting Agencies Under Section 312 of the Fair and Accurate Credit Transactions Act

FR Document Number: E7-23549 Legacy Document ID: RIN: 1557-AC89

Publish Date: 12/13/2007 00:00:00

Submitter Info:

First Name: Thomas

Last Name: Linke

City: Pensacola

Country: United States

State or Province: FL

Postal Code: 32503-1906

Organization Name:

Comment Info: =================================================================

General Comment:

I am a banker with more than 30 years lending experience, the majority of which

has been spent as the senior lender in regional and community banks. For more

than 10 years I have worked as a banking consultant assisting banks with lending

issues. Our firm has worked with more than 90 client banks in seven states. The

following comments are offered for your consideration regarding the proposed

Procedures to Enhance the Accuracy and Integrity of Information Furnished to

Consumer Reporting Agencies Under Section 312 of the Fair and Accurate Credit

Transactions Act.

Under the proposed language regarding accuracy and integrity regulations, the

Guidelines Definition Approach in the proposed revision to the FACT Act, as well

as in the Interagency Guidelines revision, defines "accuracy" to mean that "any

information that a furnisher provides to a CRA about an account of other

relationship with the consumer reflects without error the terms of and liability for

the account or other relationship and the consumer's performance or other

conduct with respect to the account or other relationship." The term "without error"

is of concern, as banks are targets for litigation. I am familiar with a bank that is

accused of forcing a borrower into bankruptcy for the erroneous reporting of one

loan having been one time over 30 days late and another loan erroneously reported

as 60 days late. Within days of the first occurrence, the bank identified the error

prior to the borrower's knowledge, notified the credit reporting agencies to correct

the error (both by facsimile and by letter), and provided written notification to the

borrower. The error was promptly corrected by all credit reporting agencies and

the credit reports updated to reflect accurate information. The second reporting

error involved a different loan and occurred some time later. That error was not

identified by the bank or reported to the bank by the borrower prior to the loan

being paid off a few months later. The borrower subsequently filed for bankruptcy

and has sued the bank for a substantial sum, claiming these two reporting errors

forced him into bankruptcy. While the borrower generally has a clean credit

history otherwise, further investigation reveals subprime mortgage lenders made

loans on rental properties based upon unverified income that resulted in a

Debt/Income Ratio exceeding 100%. The bank has been forced to spend a

significant amount defending itself. It should be noted that at the time the errors

occurred, the bank had total assets of approximately $30 million and

approximately 15 employees.

The words "without error" are of concern. The purpose of the regulation is to make

every effort to eliminate errors in credit reporting. Care should be taken to ensure

that the proposed language does not result in a bank being in violation of the law

for an honest mistake that is promptly corrected. If community banks cease

reporting in order to eliminate the risk of litigation over an honest mistake, credit

information used in the credit decision process will be compromised. For these

reasons, use of the version that does not contain the words "without error" is

recommended.