Applying for a loan is a tedious and often frustrating ordeal. The application requires a lot of information and the process may take a lot longer than you think it should. And now we are learning that you may be denied a loan for being a good consumer.

That’s right. For being a diligent consumer and dedicated to monitoring your credit report you may be denied a loan.

The problem? Fannie Mae’s automated underwriting system has been rejecting applications where there is a notation on a consumer’s credit report that he or she has disputed an account. A consumer -- despite validly disputing a debt under the Fair Credit Reporting Act -- is now being denied a loan.

In response to a Washington Post inquiry, see the article here, Fannie Mae explains that it does not actually reject the loan, but rather sends it back to your lender for manual underwriting. However, lenders rarely engage in manual underwriting. Therefore, you are basically going to be denied a loan.

This conduct is outrageous and it is even sadder than Fannie Mae wants to blame the lazy lender. Yes, the lender should do a manual underwriting, but Fannie Mae’s system should not be rejecting applications based upon disputed accounts appearing on a consumer’s credit report.

Such a practice appears to put consumers in a Catch 22. Dispute inaccurate information and get denied a loan. Leave inaccurate information on your credit report and get denied a loan because of the bad credit it causes.

What is the solution? One is to convince Fannie Mae to change its policy and two is to have lenders perform manual underwriting when the situation calls for it.

Consumers should not stop disputing inaccurate information on their credit report. A credit report needs to be accurate and the owner of the record is the only person who can validate whether the listed information is correct.

Back when Congress passed the Credit Card Act, it instituted a delay to implementation to allow the credit card companies time to make adjustments to their billing systems and generally adjust for the coming changes.

Rather than take steps to begin implementing those changes, the credit card companies decided to take their remaining time and start raising every rate and fee they had plus introduced new fees all while cutting consumer spending limits ensuring further economic difficulties. Senator Dodd has apparently seen enough.

Though not long ago Senator Dodd was seen as a strong advocate for the financial industry which included a very favorable loan from former Countrywide Financial Corp. He has taken to championing the consumer financial cause (he is up for reelection next year after all).

Dodd has proposed an immediate freeze on credit-card interest rates. Whether Congress will act and put this freeze into place is anyone's guess.

At this point at least the appearance that Congress is not going to continue to allow the financial Industry to do whatever it wants at the expense of consumers is at least refreshing.

President Obama has proposed sending a tax-free check of $250 to Social Security recipients in the early part of 2010. The president wants the checks to replace the annual COLA (cost-of-living adjustment) that Social Security beneficiaries normally receive but won't next year because of the current state of the economy. This payment would be in addition to the one-time payment made to seniors as part of last year's economic stimulus legislation. That payment was taxed.

The one-time check proposed by the president would cost $13 billion over a 10-year period, the White House estimates, and it would add to the nation's ballooning deficit.

The first thought that popped into my mind was: Gee, $250...that might pay for a few prescriptions or a utility bill, and while that's helpful, what happens after that?

There is no doubt that seniors have been hit hard by this recession in many ways: lower interest rates on their savings plans; reduced or lost pension plans and health benefits; rising medical costs;investments that have been depleted--or stolen--by scammers such as Madoff and his ilk. Then add inflated prices for gasoline, groceries and insurance and, of course, utilities -- especially in San Diego. Also. many seniors have had to come to the aid of their children and grandchildren who are also being affected by the economic meltdown as well--lending them money and even having them move in with them.

Then add in the State of Califonia's budget crisis that has resulted in many programs that assist seniors being cut. The safety net has been shredded by the state's economic problems.

Of course, if we look at the President's proposal through cynical eyes, giving senior citizens a tax-free check in an election year isn't a bad move either. Even Republicans might jump on that band wagon with amazing speed but hold on -- adding $13 billion to the deficit for a one-time shot in the arm? I am not so sure.

If I was going to place a Vegas bet on this, I'd put my money on the payment being approved by Congress, but there are other things that could be done that will help America's seniors and disbaled in the long run.

Instead of sendng a $250 check, I'd suggest that greater priority needs to be given to see that the nation is restored as soon as possible to economic well-being to protect and stablize the retirement dreams and benefits of so many. We need to put real teeth in the regulation of banks and other financial agencies responsible for this economic meltdown,and take steps to assure the solvency of Medicare and Social Security for current and future generations of seniors. Why not put more funding into quality programs that help seniors on the local level because those funds will go to seniors who really need assistance, and let's not forget about the current debate on health care reform.

This nation is aging fast, and our government has done little to prepare for that reality. That fact is a recipe for the next huge national crisis (see below).
Maybe investing that $13 billion in expanded health care and assistance
on the local level for our seniors is the better way to go.

The Centers for Disease Control and Prevention in Atlanta gives a clear picture in a report on Healthy Aging:

"The United States is on the brink of a longevity revolution. By 2030, the proportion of the U.S. population aged 65 and older will double to about 71 million older adults, or one in every five Americans. The far-reaching implications of the increasing number of older Americans and their growing diversity will include unprecedented demands on public health, aging services, and the nation's health care system.

"Chronic diseases exact a particularly heavy health and economic burden on older adults due to associated long-term illness, diminished quality of life, and greatly increased health care costs. Although the risk of disease and disability clearly increases with advancing age, poor health is not an inevitable consequence of aging.

"Much of the illness, disability, and death associated with chronic disease is avoidable through known prevention measures."

To Members of Congress:

The House Financial Services Committee is considering the Consumer Financial Protection Agency Act of 2009. UCAN strongly urges all Members of Congress to support and vote for the creation of this agency.

Failure to provide proper oversight of the financial industry led to one of the biggest financial downturns in the history of our country. The consumer has become the forgotten party in financial transactions. Financial documents have become so complicated and convoluted that archeologists could not uncover their meaning. Yet, it is these same consumers who are the taxpayers shouldering the burden for the crisis created because regulators failed to protect consumer interests.

In supporting the creation of the Consumer Financial Protection Agency, UCAN urges that you adopt at least the original form of the bill. Do not let lobbyists dissuade you as to what is best for consumers, best for the country, best for the economy, and in the long run best for the financial industry and those asking you to water down the bill.

Do not adopt amendments that will prevent the States from adopting even stronger consumer protections. The Consumer Financial Protection Agency will work best in conjunction with State regulators, not by usurping power of state regulators to their own consumers.

A robust Consumer Financial Protection Agency with strong regulatory oversight working in conjunction with state regulators will help prevent some of the financial products and practices, such as predatory lending, which led to this economic downturn.

In using taxpayer money to clean up this mess, lawmakers have vowed time and time again to protect the consumer. Now is the time for you to show that your constituents are more important than the lobbyists, that you are in fact their representatives.

Create a strong Consumer Financial Protection Agency. It is in the best interest of consumers/taxpayers/constituents and the financial industry.