The Big Meeting
Or, How I Spent My Summer Vacation
9/3/99 - Transcript of FTC
Public Forum: "THE CONSUMER AND CREDIT SCORING"
For easiest viewing of the transcript, follow the directions on the transcript page.
Highlights:
- Fair, Isaac answers the big question from creditscoring.com: What horrible thing will happen if you release the consumer's score to him?
- The national credit bureaus' answer to the same question: "It's an issue I'm not going to be able to address today. "
FTC, Public Forum: The Consumer and Credit Scoring
Equifax,
Experian and Trans Union were not on any of the
panels. They sent some
guy
instead.
The forum is
history, but this is where the fun begins: the
FTC transcribed the audio of the forum into
written form and posted it on their web site.
The official agenda:
PUBLIC
FORUM:
THE CONSUMER AND CREDIT SCORING
July 22, 1999
AGENDA
9:00 a.m.
Introductory Remarks
9:10 a.m.
Credit Scoring: An Overview
This overview presentation is intended,
in conjuction with the panel that follows,
to give context to our later discussions.
- Peter
McCorkell, Senior
Vice President and General
Counsel, Fair, Isaac and
Company, Inc.
10:10 a.m.
The Use of Credit Scoring In The Mortgage
Industry
Panelists will discuss, in addition to
credit scoring, mortgage scoring and
automated underwriting.
Panelists:
11:00 a.m.
- BREAK
11:15 a.m.
Consumers' Experiences With Credit
Scoring
This session will identify the
issues and concerns that consumers have
regarding the use of credit scoring. We
will first hear from the panelists, who
will begin the issue identification
process, followed by an open discussion
during which everyone in attendance is
encouraged to participate.
Moderator:
Peggy Twohig, Assistant
Director for Financial Practices, Federal
Trade Commission
Panelists:
12:15 p.m.
- LUNCH BREAK
A list of area restaurants is
available on the table outside of Room
432.
1:30 p.m.
Is Credit Scoring Fair?
This panel will address, among other
issues, whether the use of scoring
adequately assesses risk for all
populations of consumers, and how the use
of overrides impacts the use of scoring.
Following brief presentations by the
panelists, we will have an open
discussion of the points made by the
panelists as will as any issues raised in
the morning session that are
appropriately addressed here.
Moderator:
David Medine, Associate Director for
Financial Practices, Federal Trade
Commission
Panelists:
- R. Russell Bailey, Fair
Lending Team Leader, Comptroller
of the Currency
- Robert Cook, Senior
Fair Lending Specialist, Federal
Reserve Board
- Debby
Goldberg, Acting Dir.,
Neighborhood Revitalization
Project, Center for Community
Change
- Peter
McCorkell, Senior
Vice President and General
Counsel, Fair, Isaac and
Company, Inc.
- Raj Mehra, Director,
Financial Risk Management, PricewaterhouseCoopers
- Margot
Saunders, Managing Attorney,
National Consumer Law Center
3:10 p.m.
- BREAK
3:25 p.m.
What Information Should Consumers
Receive About Credit Scoring? Who should
Provide That Information?
This panel will address, among other
issues, whether consumers should have
access to credit scores, what information
is currently available to consumers
concerning scores, what additional
information could be made available, and
the appropriate source to privide the
necessary information (e.g.,consumer
reporting agencies, housing counselors,
real estate agents, loan officers).
Moderator:
Peggy Twohig, Assistant
Director for Financial Practices, Federal
Trade Commission
Panelists:
- Ray
Crescenzo, Vice
President, Associated Credit
Bureaus, Inc.
- Virginia
Ferguson, Vice President, National
Association of Mortgage Brokers
- Don M.
"Dusty" Lashbrook, Executive
Vice President, Mortgage.com
- Forest
Pafenberg, Director
of Real Estate Finance Research, National
Association of Realtors
- Elisabeth
Prentice, New York/Puerto
Rico District Director, Neighborhood
Reinvestment Corporation
- Kirk
Willison, Sr. Vice President,
Director of Government Affairs, Countrywide
Home Loans, Inc.
4:45 p.m.
Concluding Remarks
- David
Medine, Associate Director for
Financial Practices, Federal
Trade Commission
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Panelists
- Peter McCorkell, Senior Vice
President and General Counsel, Fair, Isaac and
Company, Inc. (last known whereabouts, 20050108: With Wells Fargo as of August 16, 2004)
- Pamela Johnson, Vice President,
Single Family Mortgage Business, Fannie Mae (20050108 still with Fannie Mae as of February 10, 2004)
- Peter Mahoney, Associate
General Counsel, Freddie Mac
- The Promise of Automated Underwriting - Providing a simpler, fairer, more inclusive mortgage-lending system
by Peter E. Mahoney and Peter M. Zorn
- Carroll Justice, Executive
Vice President, FT Mortgage
Companies
- Simi Batra, Consumer
- Marcia Griffin, President, HomeFree USA
HomeFree USA "Reveals your credit score and current financing eligibility from the lender's perspective"
- Caryl Iseman - "Most borrowers are not even aware
that they cannot get their own score."
- R. Russell Bailey, Fair
Lending Team Leader, Comptroller of
the Currency
- Robert Cook, Senior Fair
Lending Specialist, Federal Reserve
Board
- Debby Goldberg, Acting Director,
Neighborhood Revitalization Project, Center for
Community Change
- Raj Mehra, Director,
Financial Risk Management, PriceWaterhouseCoopers
Credit Scoring
and Loan Scoring: Tools for Improved
Management of Federal Credit Programs
- Margot Saunders, Managing
Attorney, National
Consumer Law Center
- Moderator: Peggy Twohig,
Assistant Director for Financial
Practices, Federal Trade Commission
"Peggy Twohig,
assistant director for credit
practices at the Federal Trade
Commission, generally favors credit
scoring.
She thinks it generates
more uniform decisions than do loan
officers and that probably means
fairer, faster decisions about whom
to loan money to.
Still, she wonders just
what information credit bureaus are
using and what weights the models
give to different factors. 'It's too much
of a black box to consumers,' she said. 'That
needs to be talked about and
explained more, particularly by the
lenders.'"
- Ray Crescenzo, Vice
President, Associated
Credit Bureaus, Inc.
- Virginia Ferguson
- Don M. "Dusty"
Lashbrook, Executive Vice President, Mortgage.com - Not found on this page (7/24/99).
- Forrest Pafenberg, Director
of Real Estate Finance Research, National
Association of Realtors
- Elisabeth Prentice, New York/Puerto
Rico District Director, Neighborhood Reinvestment
Corporation
- Kirk Willison, Sr. Vice
President, Director of Government Affairs,
Countrywide Home
Loans
The Big Questions for
the Big Meeting - Before the
lunch break, the first five were read
aloud and a page with all 25 was given to
the FTC.
- What percentage of
loans evaluated by Fannie Mae and
Freddie Mac automated mortgage
underwriting use scores created
by Fair, Isaac?
- Will the credit
reporting agencies release data
to anyone who wants to create a
new scoring system?
- If I am applying for
a mortgage, how much does it cost
to have a score updated
immediately if I find errors on
my report?
- Do you allow
creditors to see scores for the
purpose of evaluating existing
customers? Do credit card
companies access credit scores
months or years after issuing the
card-- to determine the risk of a
card-holder-- to raise or lower
his rate?
- How can I
tell how many credit cards to
have to avoid that
factor lowering my score?
- How big is
the sample?
- What are
the highest and lowest possible
scores?
- What
publicly available studies are
planned to test the validity of
credit scoring?
- What
actions have government sponsored
enterprises Fannie Mae and
Freddie Mac taken in the
development of the broad based
risk score?
- Do
government sponsored enterprises
Fannie Mae and Freddie Mac
support the position of not
releasing scores to consumers?
- Did
Fannie Mae or Freddie Mac give
Fair, Isaac any money or
assistance?
- Doesn't
inaccurate credit reporting mean
inaccurate credit scoring?
- What
are the consequences administered
by the credit reporting agencies
for creditors who report
incorrect data?
- What
horrible thing will happen if you
release the consumer's score to
him? ANSWER
- Do
those who regulate credit scoring
have access to the data and
formulae?
- Why
are there only four reasons that
a score is not higher per credit
report? Who decided that would be
the number?
- Does
the score play a factor in
eliminating the private mortgage
insurance requirement?
- Is
there any agreement between Fair,
Isaac and Equifax, Experian, or
Trans Union that scores will not
be released to consumers?
- Is
there any agreement between
Equifax, Experian, or Trans Union
and those buying credit scores
that the buyers will not release
the scores to consumers?
- Is age a
score factor? Is it
listed as a reason a score is not
higher? What is the most number
of points lost for being a
particular age?
- Will
you post the transcript of this
conference, or a link to one, on
your web sites?
- Experian
states that it analyzes the
performance of sample credit
histories over a 24-month
period to develop scores.
If the score is to be used for a
4-year car loan, or a 30-year
mortgage, why does it study only
24 months?
- If
you were to decide to release
scores to consumers, would you
have to have your board of
directors' approval?
- Peter L. McCorkell,
senior vice president at Fair,
Isaac, said, "Minorities and low-income
borrowers present a slightly
larger risk." [source: MSN
MoneyCentral] The Equal Credit
Opportunity Act prohibits
discrimination based on race and
national origin. Who decided race
would be a part of the data and
evaluation? Why did you make that
evaluation?
- Why
didn't you list this forum on
your web sites?
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You
heard it here, first. Sometimes spin means
doing nothing at all:
- Fair, Isaac -
Industry Events - The meeting is
missing from their calendar on 6/13/99.
Update, 7/19/99: still missing.
- Associated
Credit Bureaus, Inc. - Latest News - The meeting is
missing from their list on 6/13/99.
Update, 7/19/99: still missing.
- Equifax :: About
Us :: News Releases :: Changing the Shape
of Global Commerce (Seriously. No
kidding. That's the name of the page). -
The meeting is missing from their list 6/13/99.
Update, 7/19/99: still missing.
- Experian News - The meeting is
missing from their list 6/13/99. Update,
7/19/99: still missing.
- Trans Union -
What's New - Oh, come on, you
don't really expect them to... (6/13/99).
Update, 7/19/99: still missing.
- Fannie Mae - News Releases - The meeting is
missing from their list 6/13/99. Update,
7/19/99: still missing.
- What's New at
Freddie Mac - The meeting is missing
from their list 6/15/99. Update, 7/19/99:
still missing.
Shooting fish in a
barrel.
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