REALTORS, BANKERS AT ODDS OVER CONSUMER CREDIT.

Byline: GREGORY J. WILCOX Real Estate

Realtors and Consumers Union are preparing to battle the banking industry and any other enterprise that extends credit.

Both groups support AB 800, a measure carried by Democratic Assemblywoman Catherine Kehoe of San Diego, that would make lenders responsible for the accuracy of information they pass on to credit reporting agencies.

They are engaging in this effort on behalf of future borrowers throughout California.

Lenders are not happy.

On the surface it seems as if Realtors are trying to shoot themselves in their wallets, since some of the money that lenders lend for home purchases trickles down to commission checks.

The first skirmish in this fight over the ``Truth in Credit Act'' is scheduled for May 5 at a hearing of the Assembly Banking and Finance Committee in Sacramento.

It seems a simple matter of language.

Currently, lenders cannot report credit information unless they believe it to be false. The bill would change this so lenders could not report credit information unless they know it to be true.

This does not sound so simple to the California Bankers Association.

``We are not supportive of that bill,'' said spokeswoman Anissa Yates. Lenders want accurate information just as much as consumers, especially when large amounts of money needed to buy a house are in play.

``We are trying to assess risk. We are assuming a financial risk in issuing credit. If the file is incomplete or inaccurate it's conceivable we may assume greater risk than anticipated,'' she said.

Basically, lenders now check to make sure applicants are who they claim to be, matching names with Social Security numbers and verifying employment.

If the bill becomes law they would have to verify everything in an application, including such mundane chores as checking the spelling of street names, Yates said.

``You're talking about having to confirm every piece of information in a database. That's going to slow down the exchange of information pretty quickly. It's going to bring it to a grinding halt,'' Yates said.

But the California Association of Realtors and the consumer advocacy group believe that more control is needed.

Mistakes on credit reports can cost borrows hundreds of thousands of dollars over the life of a loan because of higher interest rates.

As proof, they offer the example of a department store or phone company that mistakenly notes a delinquent payment. That could prevent a homebuyer from getting the lowest interest rate possible.

Ron Kingston, a lobbyist for the Realtors group, said that consumers' loan decisions should only be made on accurate information.

``Consumers are the only ones who suffer if a credit report contains inaccurate information,'' said Ron Kingston, lobbyist for the Realtors group. ``At the very least consumers deserve to get the best loan terms.''

Higher interest rates, he notes, benefit lenders.

Backers of the legislation said they are compiling as many stories as possible about borrowers feeling financial pain.

He said they have already heard from a San Francisco family who recently bought a $500,000 house but are paying more than $400 a month more than necessary because they were forced into a higher interest rate because of an $8.23 bad debt inaccurately placed in their credit file.

``Many of the home sales transactions occur within 30 days and if you can't get the best loan possible based based on information that is inaccurate you're going to be put in a higher interest rate loan,'' he said.