On August 25, the director of the Office of Management and Budget (OMB) issued a memo directing “agencies offering direct lending and loan guarantee programs focused on consumer lending or small and medium Companies where a consumer’s credit history is a factor, whenever possible and in accordance with the law, take steps to reduce the impact of medical debt in underwriting federal credit programs. While the OMB acknowledged that some agencies such as the Department of Veterans Affairs and the CFPB have already taken steps to reduce medical debt burdens, it found those earlier efforts to be insufficient. Instead, the memo points out that “[t]The collective efforts of the federal government, in collaboration with the private sector “are needed to” address the impact of the issue of medical debt as an indicator of creditworthiness. The memo outlines advice for agencies to develop a plan to eliminate medical debt as an underwriting factor in credit programs. These steps include (i)”[i]identifying any legislative, regulatory, or administrative changes that would be necessary to alter the criteria and factors for consideration, exclude medical debt, or otherwise mitigate the impact of considering or underwriting medical debt in federal lending programs”; (ii) conduct a “[i]first qualitative assessment and cost-benefit analysis of any legislative or regulatory development” or of any anticipated development; (iii) conduct a “[a]assessment of the need for updates to the model for estimating FCRA costs, particularly whether the exclusion of medical debt would explicitly or implicitly affect particular underwriting requirements such as debt-to-income ratios, etc. » ; and (iv) incorporating stakeholder feedback and assessing known risks that could impact an agency’s goal of achieving its plan.


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