Failure to pay mortgage does not relieve mortgage companies of responsibilities under FCRA

Mohamed v. Select Portfolio Servicing, Inc., et al, 215 F.Supp.3d 85 (Dist. D.C.)

 

The mortgage was transferred among various servicers and various holders over the course of its life. The consumer/mortgagor, Mr. Mohamed, requested confirmation from his various servicers that they were entitled to payment on the note. Mr. Mohamed eventually stopped paying on the note (in fact, he didn’t make a payment for over five years), stating that his current servicer, EMC, had failed to establish that they were the holder of the Note.

 

Mr. Mohamed filed disputes with the credit reporting agencies (CRA’s) to dispute the delinquent reporting of the mortgage account. Chase, who was now the servicer, verified the account that was accurately reported as delinquent from April 2011 forward.

 

After the dispute was sent, Chase sent a letter to Mr. Mohamed that Select Portfolio Servicing, Inc (SPS) would be his new loan servicer. Mr. Mohamed again disputed the negative reporting of the note to the CRA’s, which forwarded the dispute to Chase and SPS.

 

Importantly, Chase and SPS both verified that the information they had reported about Mohammed’s delinquent mortgage payments was consistent with their prior reports, but neither Chase nor SPS otherwise investigated whether the account information they had reported was accurate.

 

The Court first stated that “The FCRA was enacted to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.”

 

If the consumer notified the CRA that he/she disputes the accuracy of certain credit information, the CRA must inform the furnisher of the information about the dispute. After receiving the notice, the furnisher must conduct an investigation with respect to the disputed information, review all relevant information provided by the CRA, and report the results of the investigation. If any item of information disputed by a consumer is found to be inaccurate or incomplete or cannot be verified after any reinvestigation, the furnisher must either modify that item, delete that item, or permanently block the reporting of that item.

 

The FCRA provides a private right of action against those who willfully or negligently fail to comply with the FCRA’s requirements.

 

The Court, in construing the Amended Complaint “generously,” inferred that the Plaintiff alleges that SPS did not look into the merits of the Plaintiff’s claims. Istead, they simply verified that the information was being reported consistently with its prior reportings and made no effort to determine if its prior reporting was accurate or inaccurate.

 

The Court further noted that accuracy of the reporting does not excuse a furnisher’s duty under the FCRA to reasonably investigate the dispute.’

 

Finally, the Court ruled in favor of the Plaintiff, holding that a private plaintiff may not challenge a furnisher’s initial failure to report information as disputed. However, as required by Section 1681s-2(a)(3), they may challenge a furnisher’s failure to report it after receiving notice of a dispute in accordance with Section 1681s-2(b), if the absence of such notation would render the information materially misleading.

 

The Court dismissed a number of the Plaintiff’s other claims but allowed the FCRA claim to move forward.

 

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