Skip to main content

Search

Mortgage Servicing and Loan Modifications: 7.3.4.1 GSE HAMP

Both Fannie Mae and Freddie Mac offered a version of the Home Affordable Modification Program (HAMP) through the end of 2016.145 Like the Treasury Department’s HAMP, servicers used a uniform loan modification process to provide eligible borrowers with a monthly payment targeted to thirty-one percent of their monthly gross income. All GSE servicers were required to evaluate borrowers for GSE-HAMP if they applied by December 30, 2016. The structure, requirements, and timeline of the GSEs’ programs paralleled HAMP Tier 1.

Mortgage Servicing and Loan Modifications: 7.4.4.3 Short Sale

Short Sale. With a short sale, Fannie Mae agrees to accept the proceeds from the sale of a property to satisfy the amount owed on a mortgage loan when the proceeds are less than the amount owed.216 Subordinate lien holders must agree to the short sale, though they can be paid up to $6000 in aggregate to release their liens on the property.

Mortgage Servicing and Loan Modifications: 7.5.5.3 Short Sale

Short sale. The Freddie Mac standard short sale is a sale of the property for less than the amount owed on a mortgage.277 As with other options, the borrower must have experienced a hardship and all other workout options must be considered prior to the use of a short sale procedure.278 In addition, subordinate lien holders must agree to the short sale, although they can be paid up to $6000 in aggregate to release their liens on the property.279

Mortgage Servicing and Loan Modifications: 7.5.5.4 Deed in Lieu of Foreclosure

A deed in lieu of foreclosure is a workout option in which a borrower conveys clear and marketable property title to Freddie Mac in exchange for a discharge of the debt.296 Freddie Mac revised the requirements for its deed in lieu of foreclosure process in keeping with the servicing alignment initiative and the CFPB’s mortgage servicing rules.297

Mortgage Servicing and Loan Modifications: 7.6.4 The FHFA Has Not Provided Clear Data on Performance of Loans After Sales

As noted above, since 2016 the GSEs have sold over 500,000 reperforming loans. Prior to June of 2023, the GSEs had not published any data describing how the borrowers fared after their loans were sold. In its June 2023 updated Fact Sheet, FHFA provided a brief analysis of the post-sale performance of reperforming loans and reported that only a limited number have faced foreclosure.

Fair Credit Reporting: 2.7.6 Data Brokers

Data brokers are companies that have developed highly sophisticated databases of consumer information, which may or may not be governed by the FCRA, the Gramm-Leach-Bliley Act, or other laws and regulations intended to protect consumer data.731 Data brokers typically provide information services to a variety of businesses and government entities, sometimes to detect fraudulent transactions or to assist in locating individuals.732

Fair Credit Reporting: 2.1.1 Definitions Analyzed in This Chapter

The FCRA regulates primarily “consumer reporting agencies” (CRAs) and “consumer reports.” This chapter will address the scope of both of these terms as well as how the FCRA governs transactions involving either of them. Furthermore, since FCRA rights generally apply only to consumers, this chapter will also analyze the Act’s definition of “consumer.”

Simply put, the Act defines a “CRA” as an entity that furnishes consumer reports and defines “consumer reports” as information communicated by a CRA. Clearly, these two terms are interdependent.

Fair Credit Reporting: 2.3.6.8 Legitimate Business Need for Information

One of the potentially broadest types of information incorporated into the definition of consumer report is information for which a person “otherwise has a legitimate business need” in one of two situations: “(i) in connection with a business transaction that is initiated by the consumer; or (ii) to review an account to determine whether the consumer continues to meet the terms of the account.”314

Fair Credit Reporting: 2.5.3.2 “Assembling or Evaluating”

Another aspect of the definition of “consumer reporting agency” is that the activity involve “assembling or evaluating” information reported to third parties.475 The terms “assemble” and “evaluate” are not defined in the FCRA and, except for a general tenor of casting a wide net, are unexplained in the legislative history.

Fair Credit Reporting: 2.3.4.2.1 Introduction

Certain basic information about a consumer is not a consumer report if it does not bear on the seven FCRA characteristics. However, if the information falls within the Gramm-Leach-Bliley Act’s definition of nonpublic personal information,116 it may be protected from disclosure by that Act.117

Fair Credit Reporting: 4.4.6.10.2.4 Class actions settlement reforming CRA procedures for reporting discharged debts

As a result of a major class action settlement, the three nationwide CRAs were required to revise their procedures as to how they report debts discharged in a chapter 7 bankruptcy.1026 The settlements essentially reversed the presumption of non-dischargeability that the CRAs had been applying to chapter 7 bankruptcies by requiring the CRAs to treat all prebankruptcy debts as discharged, unless furnishers provide information showing that a debt was excludable from discharge.

Fair Credit Reporting: 4.5.3.2 Inaccuracy Required for Liability

The plain language of the FCRA itself does not require a showing of inaccuracy to impose liability for failure to conduct a reasonable investigation.1367 Section 1681i(a) states that, “if the completeness or accuracy of any item of information . . . is disputed by the consumer and the consumer notifies the agency directly, . . .

Fair Credit Reporting: 4.5.2.1 When a CRA Must Reinvestigate

If a consumer conveys to the CRA a dispute over the completeness or accuracy of any item of information in the consumer’s file, the CRA must delete the disputed information or conduct a reinvestigation.1170 The dispute need not be in writing,1171 although practitioners recommend doing so.1172 The CFPB has reported that 13% of consumer disputes to nationwide CRAs are submitted by telephone.1173

Fair Credit Reporting: 4.5.2.2 Specificity Required of a Dispute

The FCRA does not require that consumers submit disputes on any specific form.1185 A consumer’s lack of precision as to the item being disputed is usually not a sufficient reason to refuse to reinvestigate.1186 But if the consumer does not provide a clear statement that the accuracy or completeness of specific information is “disputed” or “challenged,” the consumer’s statement may not be construed as an exercise of rights under the Act.1187

Fair Credit Reporting: 4.5.2.5.2 Exceptions

There are several exceptions to the requirement that the consumer directly notify the CRA of a dispute. First, a CRA that receives a consumer’s complaint of identity theft is required to forward it to all other nationwide CRAs.1284

Fair Credit Reporting: 4.5.2.7.2 Disputes from credit repair organizations

If a request is from a credit repair organization, instead of the consumer, it is likely the CRA will refuse to reinvestigate because the request did not come from the consumer.1327 The nationwide CRAs will often complain that the large number of credit repair disputes overburden their dispute processing procedures. They also claim that a great percentage of disputes are generated by such organizations.