Building Credit Access for Veterans Act of 2021

II 117TH CONGRESS 1ST SESSION S. 1838 To require the Secretary of Veterans Affairs to carry out a pilot program on using alternative credit scoring information for veterans and members of the Armed Forces, and for other purposes. IN THE SENATE OF THE UNITED STATES MAY 26, 2021 Mr. SCOTT of South Carolina (for himself and Mr. BLUMENTHAL) introduced the following bill; which was read twice and referred to the Committee on Veterans’ Affairs A BILL To require the Secretary of Veterans Affairs to carry out a pilot program on using alternative credit scoring infor- mation for veterans and members of the Armed Forces, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Building Credit Access 4 for Veterans Act of 2021’’. 5 VerDate Sep 11 2014 23:08 Jun 16, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1838.IS S1838 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 1838 IS SEC. 2. DEPARTMENT OF VETERANS AFFAIRS PILOT PRO- 1 GRAM ON USE OF ALTERNATIVE CREDIT 2 SCORING INFORMATION OR CREDIT SCORING 3 MODELS. 4 (a) PILOT PROGRAM REQUIRED.— 5 (1) IN GENERAL.—Not later than one year 6 after the date of the enactment of this Act, the Sec- 7 retary of Veterans Affairs shall commence carrying 8 out a pilot program that will assess the feasibility 9 and advisability of— 10 (A) using alternative credit scoring infor- 11 mation or credit scoring models using alter- 12 native credit scoring methodology for an indi- 13 vidual described in paragraph (2)— 14 (i) to improve the determination of 15 creditworthiness of such an individual; and 16 (ii) to increase the number of such in- 17 dividuals who are able to obtain a loan 18 guaranteed or insured under chapter 37 of 19 title 38, United States Code; and 20 (B) in consultation with such entities as 21 the Secretary considers appropriate, estab- 22 lishing criteria for acceptable commercially 23 available credit scoring models to be used by 24 lenders for the purpose of guaranteeing or in- 25 VerDate Sep 11 2014 23:08 Jun 16, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1838.IS S1838 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 1838 IS suring a loan under chapter 37 of title 38, 1 United State Code. 2 (2) INDIVIDUAL DESCRIBED.—An individual de- 3 scribed in this paragraph is a veteran or a member 4 of the Armed Forces who— 5 (A) is eligible for a loan under chapter 37 6 of title 38, United States Code; and 7 (B) has an insufficient credit history for a 8 lender or the Secretary to determine the credit- 9 worthiness of the individual. 10 (3) ALTERNATIVE CREDIT SCORING INFORMA- 11 TION.—Alternative credit scoring information de- 12 scribed in paragraph (1)(A) may include proof of 13 rent, utility, and insurance payment histories, and 14 such other information as the Secretary considers 15 appropriate. 16 (b) VOLUNTARY PARTICIPATION.— 17 (1) IN GENERAL.—The Secretary shall ensure 18 that any participation in the pilot program is vol- 19 untary on an opt-in basis for a lender, a borrower, 20 and an individual described in subsection (a)(2). 21 (2) NOTICE OF PARTICIPATION.—Subject to 22 paragraph (3), any lender who participates in the 23 pilot program shall— 24 VerDate Sep 11 2014 23:08 Jun 16, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1838.IS S1838 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 1838 IS (A) notify each individual described in sub- 1 section (a)(2) who, during the pilot program, 2 applies for a loan under chapter 37 of title 38, 3 United States Code, from such lender, of the 4 lender’s participation in the pilot program; and 5 (B) offer such individual the opportunity 6 to participate in the pilot program. 7 (3) LIMITATION.— 8 (A) IN GENERAL.—The Secretary may es- 9 tablish a limitation on the number of individ- 10 uals and lenders that may participate in the 11 pilot program. 12 (B) REPORT.—If the Secretary limits par- 13 ticipation in the pilot program under subpara- 14 graph (A), the Secretary shall, not later than 15 15 days after establishing such limitation, sub- 16 mit to Congress a report setting forth the rea- 17 sons for establishing such limitation. 18 (c) APPROVAL OF CREDIT SCORING MODELS.— 19 (1) IN GENERAL.—A lender participating in the 20 pilot program may not use a credit scoring model 21 under subsection (a)(1)(A) until the Secretary has 22 reviewed and approved such credit scoring model for 23 purposes of the pilot program. 24 VerDate Sep 11 2014 23:08 Jun 16, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1838.IS S1838 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 1838 IS (2) PUBLICATION OF CRITERIA.—The Secretary 1 shall publish in the Federal Register any criteria es- 2 tablished under subsection (a)(1)(B) for acceptable 3 commercially available credit scoring models that use 4 alternative credit scoring information described in 5 subsection (a)(1)(A) to be used for purposes of the 6 pilot program. 7 (3) CONSIDERATIONS; APPROVAL OF CERTAIN 8 MODELS.—In selecting credit scoring models to ap- 9 prove under this section, the Secretary shall— 10 (A) consider the criteria for credit score 11 assessments under section 1254.7 of title 12, 12 Code of Federal Regulations; and 13 (B) approve any commercially available 14 credit scoring model that has been approved 15 pursuant to section 302(b)(7) of the Federal 16 National Mortgage Association Charter Act (12 17 U.S.C. 1717(b)(7)) or section 305(d) of the 18 Federal Home Loan Mortgage Corporation Act 19 (12 U.S.C. 1454)(d)). 20 (d) OUTREACH.—To the extent practicable, the Sec- 21 retary shall conduct outreach to lenders and individuals 22 described in subsection (a)(2) to inform such persons of 23 the pilot program. 24 (e) REPORT.— 25 VerDate Sep 11 2014 23:08 Jun 16, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1838.IS S1838 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 1838 IS (1) IN GENERAL.—Not later than two years 1 after the date of the enactment of this Act, the Sec- 2 retary shall submit to Congress a report on the pilot 3 program. 4 (2) CONTENTS.—The report submitted under 5 paragraph (1) shall include the following: 6 (A) The findings of the Secretary with re- 7 spect to the feasibility and advisability of using 8 alternative credit scoring information or credit 9 scoring models using alternative credit scoring 10 methodology for individuals described in sub- 11 section (a)(2). 12 (B) A description of the efforts of the Sec- 13 retary to assess the feasibility and advisability 14 of using alternative credit scoring information 15 or credit scoring models as described in sub- 16 paragraph (A). 17 (C) To the extent practicable, the fol- 18 lowing: 19 (i) The rate of participation in the 20 pilot program. 21 (ii) An assessment of whether partici- 22 pants in the pilot program benefitted from 23 such participation. 24 VerDate Sep 11 2014 23:08 Jun 16, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1838.IS S1838 pbinns on DSKJLVW7X2PROD with BILLS 7 •S 1838 IS (D) An assessment of the effect of the 1 pilot program on the subsidy rate for loans 2 guaranteed or insured by the Secretary under 3 chapter 37 of title 38, United States Code. 4 (E) Such other information as the Sec- 5 retary considers appropriate. 6 (f) TERMINATION.— 7 (1) IN GENERAL.—The Secretary shall complete 8 the pilot program required by subsection (a)(1) not 9 later than September 30, 2025. 10 (2) EFFECT ON LOANS AND APPLICATIONS.— 11 The termination of the pilot program under para- 12 graph (1) shall not affect a loan guaranteed, or for 13 which loan applications have been received by a par- 14 ticipating lender, on or before the date of the com- 15 pletion of the pilot program. 16 (g) INSUFFICIENT CREDIT HISTORY DEFINED.—In 17 this section, the term ‘‘insufficient credit history’’, with 18 respect to an individual described in subsection (a)(2), 19 means that the individual does not have a credit record 20 with one of the national credit reporting agencies or such 21 credit record contains insufficient credit information to as- 22 sess creditworthiness. 23 Æ VerDate Sep 11 2014 23:08 Jun 16, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\S1838.IS S1838 pbinns on DSKJLVW7X2PROD with BILLS