The use of consumer reports is integral to the processing of a mortgage loan application. Enacted in 1970, the Fair Credit Reporting Act (FCRA) was one of the first laws to protect consumers from unauthorized access to the use of consumers’ personal information. Congress enacted the FCRA to ensure the accuracy, fairness, and privacy of consumers’ personal information that is assembled and used by consumer reporting agencies. In order to protect the rights of consumers, the law creates special obligations and restrictions for credit reporting agencies, and for furnishers and users of consumers’ personal information.
While processing mortgage loan applications, lenders and mortgage brokers are “users” of the personal financial information provided by loan applicants on consumer reports. As users of consumer reports, they cannot obtain a copy of a report without certifying that they are requesting it for a permissible purpose.
For example, in our discussion scenario described at the beginning of this section, the mortgage broker would request a copy of the homeowner’s consumer report in order to process his application. She would need to certify to the consumer reporting agency that she was using the report for a permissible purpose.