Mortgage Servicing and Loan Modifications: 7.6.2 The GSEs Sell Non-Performing and Reperforming Loans
The GSEs sell loans in two categories: non-performing loans and reperforming loans.
The GSEs sell loans in two categories: non-performing loans and reperforming loans.
After a loan has been sold, the new owner is under no obligation to service the loan in compliance with the standard GSE servicing guidelines. Foreclosure can proceed without the GSEs’ oversight. Buyers’ responsibility to adhere to post-sale guidelines has evolved since the GSEs began to sell off loans.
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.
Legislative and administrative advocacy has the greatest potential to bring about changes in the GSE note sale policies. Advocates should inform Congressional and agency staff repeatedly about the direct harm these sales cause to individual borrowers.343
The FCRA excludes from the definition of “consumer report” certain communications made to an employer concerning investigations for employee misconduct or for compliance reasons.408 Under this exclusion, a communication that would otherwise qualify as a consumer report409 will be excluded from the definition if it meets certain additional tests.410 To be excluded, the communication must be made to an employer and must be in connection with an inves
A number of courts have failed to consider the full scope of the seven factors. The Fifth Circuit, in a brief unpublished decision in a case brought by a pro se plaintiff, has held that a report about an employee’s previously filed worker’s compensation claims is not a consumer report because it does not bear on one of the seven FCRA factors.107 The claims, which the employee had denied making in his employment application, were discovered after the employer obtained his health records.
Credit headers may not be consumer reports for purposes of the FCRA.
The definition of a consumer report excludes information reported by a person or company whose own experience with the consumer is reflected in the information.341 This information is sometimes termed “experience information.”342 As described in more detail below, this exemption covers a variety of circumstances.343
“Prescreening lists,” which reflect the creditworthiness of those on the list, are a series of consumer reports.142 Prescreening generally is a process by which a CRA, as a service, will compile lists of names of those fitting certain credit criteria supplied by the creditor. The creditor will then use the list to solicit consumers with a so-called firm offer of credit or other products and services.
The Big Three nationwide CRAs, as well as others, sell “inquiry activity reports” and “trigger lists.” These reports provide information that a third party has made a request for a consumer’s report. These lists are consumer reports.145
If a CRA provides a report with the expectation that the report will be used for one of the statute’s listed purposes, then the report is a consumer report under the Act; the ultimate use to which it is put is irrelevant.162 It is enough if one of the anticipated uses is covered by the FCRA, even if it is not the primary expected use.163
If information is originally collected for a purpose covered by the FCRA, a report containing that information is a consumer report, even if the report is later used exclusively for business purposes or other transactions not covered by the FCRA.175 The purpose for which the information is collected will be determined based on the reasonable expectations of the CRA at the time it collected the information.
If a new report contains just some of the information that was contained in a prior consumer report, the new report is also a consumer report, even if the new report was not used and not expected to be used for a listed purpose.183 In addition, once information from the consumer’s file is used as a “consumer report,” then any subsequent use of the same information becomes a consumer report, even if that later report is not for a listed purpose.184 For example, information that is actually used f
The FCRA should cover the CRA practice of including, along with its consumer reports, information from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) list of suspected terrorists, narcotics traffickers, and other “specially designated nationals.”186 The U.S.
The Act defines “consumer report” to exclude:
[A]ny report in which a person who has been requested by a third party to make a specific extension of credit directly or indirectly to a consumer conveys his decision with respect to such request, if the third party advises the consumer of the name and address of the person to whom the request was made and such person makes the disclosures to the consumer required under section 1681m of the title.437
Despite the generally broad understanding of “employment purposes,” the FCRA contains two significant exclusions.
Consumer reports include information used for “other purposes authorized under section 1681b,”306 and section 1681b permits CRAs to provide consumer reports when used in connection with a “determination of the consumer’s eligibility for a license or other benefit granted by a governmental instrumentality required by law to consider an applicant’s financial responsibility or status.”307
Certain common communications made by employment agencies are excluded from the definition of consumer report.413 Employment agencies are not exempted from the FCRA per se. The exclusion applies only if:
Information collected, used, and expected to be used solely for purposes of considering insurance claims is not a consumer report.294 Both the definition of consumer report in section 1681a295 and the specific permissible insurance uses of consumer reports listed in section 1681b296 are limited to eligibility and underwriting issues.
Another purpose incorporated into the definition of consumer report by the cross-reference to section 1681b is the use of reports by a person who “intends to use the information as a potential investor or servicer, or current insurer, in connection with a valuation of, or an assessment of the credit or prepayment risks associated with, an existing credit obligation.”311
Consumer reports include information used for “other purposes authorized under section 604 [15 U.S.C.
Consumer reports include information used for “other purposes authorized under section 604 [15 U.S.C.
There are two separate provisions in the FCRA that permit consumers to opt out of affiliate sharing.
The opt-out right added by the FACTA amendments to the FCRA in 2003 specifically addresses affiliate information sharing only when that information is used for marketing purposes.
Consumers must be notified of their right to opt out of affiliate sharing of third-party information, along with the fact that the affiliate sharing will occur.382 This disclosure is built into the definition of the affiliate-sharing exclusion for third-party information; failure to provide this notice will disqualify the shared information from the exclusion and render it a consumer report.383 The disclosure must be clear and conspicuous, and the opportunity to direct that the information not b