MReport December 2020

TheMReport — News and strategies for the evolving mortgage marketplace.

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M R EP O RT | 39 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION Safeguarding Borrowers Do fintech borrowers need more credit protections? T he global health crisis is harming many Ameri- cans' financial histories, which, in the long run, could prevent large numbers of families from securing lend- ing for a home. While federal proposals and programs have sought to safeguard consumers' FICO credit scores, an edito- rial published opines these protections do not consider the emerging fintech mortgage sector. Authors Tyler Haupert and Gayatri Kawlra, both doctoral candidates in Urban Planning at Columbia University's Graduate School of Architecture, Planning, and Preservation, point out that fintech lenders generally supplement traditional credit met - rics with an assortment of "big data sources to ascertain potential borrowers' creditworthiness. They say that legislators have yet to file protections for borrowers using fintech. "Policymakers must ensure fintech lenders do not penalize consumers for recent damages to their data profiles, especially since consumer data collection has proliferated during the pandemic, often unevenly across the lines of race, age, and income level," they note. "Government responses and media attention focused on the economic crisis' impact on future homeownership have focused nar- rowly on protecting traditional FICO credit scores." The article highlights several acts and plans to protect credit scores, including a plan President- elect Joe Biden has promised to implement. However, they continue, none of the measures protect consumers who have turned to fintech mortgage lenders (which, they add, includes some of the nation's biggest mortgage lending companies). "Like credit scores used by tra- ditional lenders, consumers' online data profiles are sure to be dam- aged, and borrowers should not be denied access to loans or given subprime credit by fintech lend- ers due to economic factors well beyond their control," they con- tinue. Lawmakers and regulators such as the Consumer Financial Protection Bureau should draft and implement legislation preventing fintech lenders from incorporat- ing consumer data reflecting the pandemic's economic impact into their future lending decisions." The authors conclude that rulemaking for fintech lenders could result in a more inclusive mortgage-lending environment and "recognition of the im - portance of consumers' online behavior in shaping their financial outcomes." "The pandemic will leave its mark, not only on society's physi - cal and emotional well-being but also on its digital health," they wrote. "Without swift interven- tion, fintech mortgage lending outcomes will reflect this damage by deeming some borrower's fi- nancial risks, simply because their struggles against a health risk were tracked online."

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