April 8, 2020
Authored by: Douglas Thompson
The CFPB issued guidance and consumer information tools last week covering components of the Coronavirus Aid, Relief and Economic Security (CARES) Act. In this rapidly environment, financial services companies might do well to check the CFPB blog frequently to keep abreast of new developments and to be aware of specific information and tools consumers may reference in difficult hardship conversations.
Credit Reporting Policy Statement: On April 1, the CFPB issued a Policy Statement regarding the CARES Act credit reporting requirements lenders and credit furnishers and reporting agencies must follow under the fair Credit Reporting Act and Regulation V.
The Statement recognizes the importance of accurate credit reporting and information to the consumer financial services market system. In a press release Director Kraninger said: “During this time of uncertainty, we are providing clarity to ensure the consumer reporting industry can continue to function. Consumers rely on their credit report to purchase a new car, their new home, or to finance their college education. An effective consumer reporting system is critical in promoting fair and efficient access to credit in the consumer financial services market.”
While highlighting the adverse impact of the COVID-19 pandemic on consumers, the Policy Statement recognizes the operations and staffing challenges lenders, servicers and reporting agencies are having as well. “The Bureau intends to consider the circumstances that entities face as a result of the COVID-19 pandemic and entities’ good faith efforts to comply with their statutory and regulatory obligations as soon as possible. The Bureau believes that this flexibility will help furnishers and consumer reporting agencies to manage the challenges the current crisis poses.”
The CFPB Statement seeks to balance consumer hardships and rights against pragmatic commercial operations challenges companies are facing due to the COVID-19 pandemic. Key portions of the Statement include the following:
- Furnishing Information In Connection with Mortgage Relief: “The Bureau supports furnishers’ voluntary efforts to provide payment relief, and it does not intend to cite in examinations or take enforcement actions against those who furnish information to consumer reporting agencies that accurately reflects the payment relief measures they are employing.”
- Credit/ Payment Disputes Investigation: “In evaluating compliance with the FCRA as a result of the pandemic, the Bureau will consider a consumer reporting agency’s or furnisher’s individual circumstances and does not intend to cite in an examination or bring an enforcement action against a consumer reporting agency or furnisher making good faith efforts to investigate disputes as quickly as possible, even if dispute investigations take longer than the statutory timeframe.”
- Credit Repair or Frivolous Disputes Investigation: “The Bureau reminds furnishers and consumer reporting agencies that they may take advantage of statutory and regulatory provisions that eliminate the obligation to investigate disputes submitted by credit repair organizations and disputes they reasonably determine to be frivolous or irrelevant. The Bureau will consider the significant current constraints on furnisher and consumer reporting agency time, information, and other resources in assessing if such a determination is reasonable.”
Other CFPB Consumer Guidance relating to COVID-19 Hardships:
Mortgage Debt Relief/ Forbearance: The CFPB blog highlighted the foreclosure moratorium and right to forbearance relating to federally insured mortgages.
60 Day Foreclosure Freeze: “Lender or loan servicer may not foreclose on you for 60 days after March 18, 2020. Specifically, the CARES Act prohibits lenders and servicers from beginning a judicial or non-judicial foreclosure against you, or from finalizing a foreclosure judgment or sale, during this period of time.”
180 Day Forbearance: “If you experience financial hardship due to the coronavirus pandemic, you have a right to request a forbearance for up to 180 days. You also have the right to request one extension for another up to 180 days…There will be no additional fees, penalties or additional interest (beyond scheduled amounts) added to your account.”
For Fannie and Freddie mortgages, the CFPB also noted that in connection with forbearance, late fees will not be charged. Foreclosure and other legal proceedings will be suspended.
Protecting consumers from scams, especially those targeting the elderly: “Scammers are taking advantage of the coronavirus (COVID-19) pandemic to con people into giving up their money. Though the reason behind their fraud is new, their tactics are familiar. It can be even harder to prevent scams right now because people 65 and older aren’t interacting with as many friends, neighbors and senior service providers due to efforts to slow the spread of disease.”
Student loan relief: “Student loan borrowers now have more benefits to consider when planning for the potential financial impact from coronavirus. A new federal law, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, provides automatic suspension of principal and interest payments on federally-held student loans through September 30, 2020. These suspended payments will count towards any student loan forgiveness program.”