On June 16, 2020, the Consumer Financial Protection Bureau (Bureau) released a series of Frequently Asked Questions (FAQs) regarding furnishers and credit reporting agencies (CRAs) obligations under the CARES Act. Here is a link to the FAQs: https://files.consumerfinance.gov/f/documents/cfpb_fcra_consumer-reporting-faqs-covid-19_2020-06.pdf
Most critically, the FAQs clarified that when enforcing the amendments to FCRA under the CARES Act, the Bureau “expects furnishers and consumer reporting agencies to make good faith efforts to investigate disputes as quickly as possible, and that absent impediments due to COVID-19, disputes should be resolved under FCRA requirements.” When evaluating whether a furnisher and CRA make “good faith efforts to investigate disputes as quickly as possible” the Bureau will consider each circumstance individually as furnishers and CRAs face unique challenges.
When defining an “accommodation” under the CARES Act, the Bureau not only provided the statutory definition (“any payment assistance or relief granted to a consumer who is affected by the COVID-19 pandemic”) but also gave the following specific examples: “agreements to defer one or more payments, make a partial payment, forbear any delinquent amounts, or modify a loan or contract” and ” assistance or relief that is granted voluntarily or pursuant to a statutory or regulatory requirement.” The Bureau also noted that beyond two exceptions (Federally backed mortgage loan and student loans), furnishers are not obligated to provide consumers with an “accommodation” under the CARES Act.
The Bureau reiterated that if an accommodation is granted to a consumer who is current, then the furnisher must report the consumer as current during the accommodation. If customer is delinquent at the time an accommodation is granted, the furnisher cannot advance the delinquency status during the accommodation. FAQ Question No. 6 provided the example of: “if at the time of the accommodation the furnisher was reporting the consumer as 30 days past due, during the accommodation the furnisher may not report the account as 60 days past due.”
The Bureau specifically concluded that simply reporting a special comment code indicating that a consumer with an account is impacted by a disaster or that the consumer’s account is in forbearance is does not satisfy the obligations under the CARES Act. The Bureaus explicitly stated that the using the comment code “is not a substitute” for compliance.
Further, the Bureau explained that if a customer has multiple accounts with a furnisher, the furnisher should not report all accounts under a forbearance or some type of “accommodation” just because the customer received temporarily relief on one of his/her accounts.
Finally, the Bureau noted that following an accommodation, a furnisher cannot advance the delinquency status of the customer. For example, if the customer received a 3 month deferment and pays on the 4th month, the customer is current. – not 90 days delinquent. If the customer fails to make a payment in the fourth month, then the customer is 30 days delinquent – not 120 days.
If you have questions on the CARES Act or credit reporting generally, please contact David Berkley at db@severson.com