The Chairman of the House Financial Services Committee, Patrick McHenry (NC-10), sent a comment letter to Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra with Financial Services Committee Republicans in response to the CFPB’s Notice of Proposed Rulemaking (NPRM) regarding the agency’s proposal to change American credit and health care systems. Prior to the comment letter, Chairman McHenry raised concerns with the NPRM, which would prevent the consideration of medical debt when constructing credit reports.
Key excerpts from the letter include:
“We write to express our serious concerns regarding the Consumer Financial Protection Bureau’s (CFPB’s) latest actions to weaken the accuracy and completeness of consumer credit reports. The CFPB’s recent notice of proposed rulemaking restricting inclusion of medical debt in credit reports and scores will undermine underwriting processes and increase risk in the financial system, to the detriment of consumers. This effort will have significant negative effects on access and affordability of credit for all consumers, and particularly for low-income borrowers."
“The FCRA requires credit reports to be accurate and complete. The inclusion of medical debt in credit reports meets this requirement. The CFPB does not provide sufficient data in the proposed rule to support its claim that there are more inaccuracies in reporting of medical debt than other types of debt. Furthermore, identification of some inaccuracies in reporting of medical debt, particularly given available dispute processes, does not warrant terminating a creditor’s ability to know the debt level and burden of a potential borrower."
“With respect to the predictive value of medical debt, the CFPB fails to provide evidence that all medical debt information is insufficiently predictive and should not be included on credit reports or in credit underwriting decisions. The CFPB cites its own 2014 “Data Point” that opaquely comingles analysis on medical and non-medical collections with paid and unpaid medical collections to draw a conclusion that ‘consumers with paid medical collections were less likely to be delinquent than other consumers with the same credit score.’ Yet, the CFPB makes no distinction between paid and unpaid medical debt when it proposes to remove all medical debt information from credit reports."
“Moreover, the CFPB acknowledges that Credit Reporting Agencies currently only include medical collections on consumers’ reports if they are more than one year past due, are for collection amounts greater than $500, and remain unpaid. As a result, the medical debt information that currently remains on consumer reports can only be unpaid medical debt that the CFPB’s ‘Data Point’ demonstrated to be associated with higher delinquency rates. The CFPB’s failure to provide any further analysis as to how the recognized predictive value of unpaid medical debt is insufficient to allow for inclusion in consumer reports inserts confusion and increases the likelihood of further inaccuracies in underwriting decisions.”