On Aug. 30, the United States Supreme Court received an Amicus Brief filed by the National Credit Reporting Association Inc. (NCRA) in conjunction with several other parties (including Consumer Data Industry Association, National Association of Professional Background Screeners, Multifamily Real Estate Information Council, Coalition for Sensible Public Records Access, Software Information Industry Association, CoreLogic, Reed Elsevier Inc., and Polk) in support of them hearing the case of McBurney v. Young. If not resolved, this case will have a huge impact on the mortgage industry due to the restrictions it brings on public record access, including that needed by credit reporting agencies to process mortgage credit reports, and other mortgage closing services.
The basics of the case involve a state of Virginia statute that limits access to public records to “citizens” (or entities) of the state to protect the citizens of Virginia. This would effectively ban public record access, including that of public record aggregators (e.g., credit reporting companies, tenant screening companies), to any companies based outside of the state of Virginia, forcing them to exit the Virginia market, or to open physical offices in the state with sole purpose of processing their credit reports. In the McBurney case, this law was challenged as unconstitutional in the U.S. Federal Court’s Fourth Circuit, which upheld it from attack under the privileges and immunities and commerce clauses on two separate grounds: (1) that the effect of the ban on the petitioners’ business was merely “incidental,” and therefore, immune from challenge; and (2) that public record information is not “commerce.” The key finding that needs to be reversed to continue with business as we know it today is the latter of those two, the contention that public record information is not commerce.
Chris Mohr, a partner in the Washington, D.C. firm of Meyer, Klipper & Mohr PLLC, representing the group for the Amicus, believes that “… there is a good chance for the Supreme Court to hear this case as there is a conflict with the McBurney case and another Federal Appellate Court decision.” This conflict is found in the U.S. Third Circuit, which voided a Delaware statute that barred non-Delaware citizens from filing public record requests (Lee v. Minner, 458 F.3d 194 [3d Cir. 2006]).
That case was similar to the McBurney case featuring an out-of-state real estate data aggregator, who challenged the "citizens-only" provision arguing that this discriminatory limitation on access to public records was unconstitutional due to it denying the plaintiffs the privileges and immunities available to them as citizens of other states and violating the Commerce Clause. While those were successful arguments in the Third Circuit, the Fourth Circuit denied both claims.
Mr. Mohr stated, “The reason the case is important is because if Virginia wins, any state can bar non-citizens from access to public records, and it's not clear how far they can go. This case as applied to real estate lending, employment screening, and a host of other activities is as if every state did it.”
Mohr added, “There are national industries that depend on nondiscriminatory access to public records, all of which would be negatively affected if the Court leaves the lower court's decision unreviewed.”
That is the most potentially dangerous precedent in the McBurney case, for all public records aggregators, and the implications extend well beyond Virginia. McBurney's logic enables statutes in Virginia and elsewhere to discriminate against out-of-state entities. This is especially important in the mortgage market, as only one of about 70 mortgage credit reporting companies who can produce mortgage credit reports that meet federal lending criteria for mortgage transactions is currently located in Virginia. None of the three national credit bureaus who require access to the public record data for the industry to continue to function are located in Virginia.
The outcome on whether or not the Supreme Court takes the McBurney case should be known by mid-October. If not, then a full court lobbying press will be needed to change the Virginia law to stop this restrictive access before serious damage is incurred by Virginia residents seeking mortgages, apartments, jobs, or any type of credit transaction. Information providers will either have to relocate an office to Virginia to service those residents, or pull out of the state entirely forcing those citizens to have a much different offering of credit terms than enjoyed by the rest of the nation. For a copy of the Amicus brief filed by the group, visit www.sendspace.com/pro/dl/6myhnm.
Terry W. Clemans is executive director of the National Credit Reporting Association Inc. (NCRA). He may be reached at (630) 539-1525 or e-mail firstname.lastname@example.org.
- Mortgage Underwriter - State Farm Bank - Dunwoody, GA
- Mortgage Loan Processor - State Farm Bank - Bloomington, IL
- Mortgage Loan Processor - State Farm Bank - Tempe, AZ
- Mortgage Loan Processor - State Farm Bank - Dunwoody, GA
- Mortgage Academy - Entry Level - Accenture - Charlotte, NC
- General/Other: Customer Support/Client Care - NORTHEAST HOME LOAN, LLC - West Chesterfield, NH