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Fair Credit Reporting: 6.10.7 Applicability of the Statute of Limitations to Private Enforcement of Furnisher Violations

The FCRA’s statute of limitations expires the earlier of (1) two years after the date of discovery by the plaintiff of the violation, or (2) five years after the date of the violation.851 The furnisher’s duties under section 1681s-2(b) commence at the earliest only when it receives a request for investigation from a CRA.852 Thus, an actionable violation can only occur when it breaches one of those duties, not when it reported the underlying inaccurate information or otherwise took action for whi

Fair Credit Reporting: 12.4.2.2.3 Can a CRA take advantage of a furnisher or user’s arbitration agreement

CRAs may try to take advantage of an arbitration agreement between the consumer and another party, such as a user or a furnisher. In general, only the parties named in an arbitration agreement are bound by the agreement. For example, where an arbitration agreement requires arbitration of claims involving the creditor, its employees, its agents, or its assignees, this should not extend to a CRA.

Fair Credit Reporting: 16.7.3a Non-Credit Uses of Credit Scores

Credit reports and credit scores are increasingly used for non-credit purposes, such as employment328 and tenant screening.329 These non-credit uses have been criticized by advocates as inappropriate and having a disparate impact on consumers of color.330 In some cases, these uses may be a proxy for other types of screening t

Fair Credit Reporting: 16.7.3 Credit Scores May Undermine FCRA’s Dispute Mechanisms

Credit scoring sometimes may conflict with the FCRA’s consumer protections, most particularly its dispute provisions designed to correct inaccurate information. First, the speed of lending decisions based on credit scoring does not allow time for a consumer to dispute inaccurate information if it is discovered during the credit application process.

Fair Credit Reporting: 10.2.3a FCRA Claims Against Consumer Reporting Agencies Not Barred by Section 230 Communications Decency Act Immunity

As the internet grew commonly available to the public, and its popularity soared, Congress become concerned with the threat of tort-based claims to the free flow of speech, recognizing the medium as “a forum for a true diversity of political discourse, unique opportunities for cultural development, and myriad avenues for intellectual activity.”93 Accordingly, in 1996, Congress enacted the Communications Decency Act, adding Section 230 to the Communications Act of 1934, which granted sta

Fair Credit Reporting: 10.7.3.3.2 Aggressive industry preemption challenges

Some courts have read the preemption provisions for CRAs narrowly. For example, one district court concluded that a Texas statute requiring that certain information be included in a reinvestigation report was not preempted, because section 1681t(b)(1)(B) preempts requirements or prohibitions under state law “relating to the time by which a consumer agency must take any action,” but says nothing about requirements for the content of a reinvestigation report.380

Fair Credit Reporting: 10.7.3.3.3 CFPB interpretive rule clarifies the narrow scope of FCRA preemption

On July 11, 2022, the CFPB issued an interpretive rule clarifying that the FCRA’s express preemption provisions have a “narrow and targeted scope,” providing support for states to adopt credit reporting legislation protecting consumers.394 The rule specifically notes that state laws that forbid or restrict CRAs from including information about medical debts, evictions, rental debts, or criminal records generally would not be preempted.

Mortgage Servicing and Loan Modifications: 11.2.4 Appraisal

A determination of the current fair market value of the client’s home is important for determining what claims the homeowner may be able to assert as well as what outcomes are realistic for the homeowner. When dealing with abusive lending, property flipping, or foreclosure rescue scams, it is also a good idea to obtain an estimate of the home value at the time of the transaction. Some loan modification programs are also based, at least in part, on the value of the home.

Mortgage Servicing and Loan Modifications: 11.2.5.1 Payoff Amount

The payoff amount is typically the amount the homeowner is required to pay to satisfy the loan and obtain a release of the mortgage or reconveyance of the deed of trust. In addition to principal and interest owed on the loan, the payoff amount will include any prepayment penalties, late fees, or other fees that the servicer believes are due. It may be useful to compare the current payoff amount to any previous payoff statements that the homeowners obtained to determine if any improper fees or charges have been assessed.

Mortgage Servicing and Loan Modifications: 11.2.5.3 Contact History

Most servicers maintain a contact history detailing communications with the homeowner and other third parties. The contact history may also list important events in the loan’s history such as the date letters were sent to the borrower or the date the loan was referred to a default servicer. Automated calls to the borrower may also be recorded in the contact history. Note that different servicer departments (e.g., collections, loss mitigation, foreclosure, tax, insurance) may maintain separate contact histories. When possible, it is best to obtain a consolidated contact history.

Mortgage Servicing and Loan Modifications: 11.2.5.4 Periodic Statements

For closed-end loans, servicers are required to send periodic statements to borrowers on residential mortgage loans unless an exemption applies.38 Exemptions to the periodic statement rule apply to reverse mortgages, timeshare plans, and if the servicer provides the consumer with a coupon book that provides specific information about the loan, a practice not much used anymore.39 Small servicers, as defined an

Mortgage Servicing and Loan Modifications: 11.2.5.5 Loss Mitigation Documents

Many servicing problems revolve around the failure to properly evaluate the homeowner for loss mitigation options. In these cases, advocates should submit a request for information under RESPA asking for the relevant loss mitigation documents.45 These may include items mailed to or received by the borrower, underwriting documents, investor guidelines, internal notes regarding loss mitigation, property valuations, call logs and recordings, and any loss mitigation agreements.

Mortgage Servicing and Loan Modifications: 11.2.5.6 Pooling and Servicing Agreement

Pooling and servicing agreements (PSAs) broadly govern the securitization of residential mortgage loans, including the formation of the trust (which becomes the owner of the loans), the servicing of the loans in the trust, and the duties of various parties to the trust agreement. The PSA may outline the loss mitigation or workout options available to the servicer and the parameters of the servicer’s authority to implement those options. If a borrower is denied for a loss mitigation option based on “investor guidelines,” the servicer might be referring to the PSA.

Mortgage Servicing and Loan Modifications: 11.2.5.8 Bankruptcy Notices

If the borrower filed a chapter 13 bankruptcy case to cure a mortgage default after December 1, 2011, Bankruptcy Rules 3001 and 3002.1 require the servicer to disclose prepetition default fees and arrearage amounts on the initial proof of claim, send notices of any mortgage payment changes, send notices of any fees and expenses that are charged to the borrower’s account during the case, and file a response at the end of the case indicating whether the borrower has fully cured the default.51 This information produced during the bankruptcy case,

Mortgage Servicing and Loan Modifications: 11.2.6 Mortgage Transfer of Ownership Notices

When defending against a foreclosure or challenging servicing abuses it is important to know not only who the servicer is, but also who is the current owner of the mortgage. The identity of the current mortgage owner, however, may not always be apparent. Many mortgages today are assigned by the loan originator to a purchaser on the secondary market. Very often the mortgage owner at the time of foreclosure (or even shortly after the loan closing) is not the bank or mortgage company that originated the loan.

Mortgage Servicing and Loan Modifications: 11.2.7.1 Land Records

The mortgage or deed of trust and any related assignments should be available from the local land registry in-person or online. Local land records also can be checked to determine: the number of loans a particular lender made in that locality; the names and addresses of the affected homeowners; whether a lender has an unusually high number of foreclosures or is repeatedly flipping loans.

Mortgage Servicing and Loan Modifications: 11.2.7.2 Consumer Complaints

Through state freedom of information acts, records of consumer complaints to local consumer protection agencies, attorney general offices, and licensing divisions can be obtained to see whether similar complaints have been made about the potential defendants in the past. The Better Business Bureau should also be contacted for copies of any complaints.

Mortgage Servicing and Loan Modifications: 11.2.7.4 Corporate and Business Documents

Every state requires corporations and other businesses to file certain documents at the time the company begins operation in that state, and periodically thereafter. The filing typically consists of the articles of incorporation and annual reports. When dealing with corporations, this information is helpful to figure out who stands behind the corporation or business, in the event the corporate veil can be pierced or to sue these individuals separately.