CFPB clarifies credit reporting procedures in light of coronavirus
Lenders should avoid reporting delinquent payments to credit bureaus for consumers who seek mortgage relief, the Consumer Financial Protection Bureau said Wednesday.
The agency provided several recommendations in new guidance on the credit reporting process in light of the COVID-19 pandemic. The bureau said it will now allow lenders 45 days to investigate credit disputes, increasing the duration by 15 days.
In the policy statement, the CFPB said it supports lenders’ “voluntary efforts” to provide payment relief to consumers.
The CFPB said it will not take enforcement actions against or cite in examinations any company that provides information to credit reporting agencies that accurately reflects payment relief measures or makes a good-faith effort to investigate disputes as quickly as possible.
“During this time of uncertainty, we are providing clarity to ensure the consumer reporting industry can continue to function,” CFPB Director Kathy Kraninger said in a press release. “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.”
The Coronavirus Aid, Relief, and Economic Security Act that Congress passed last week requires lenders to report to credit bureaus that consumers are current on their loans if their payments are adjusted through a loan modification.
A section of the CARES Act also amends the Fair Credit Reporting Act, which generally requires that credit bureaus and furnishers of information investigate disputes within 30 days of being notified by a consumer.
The CFPB said it is extending the investigation period to 45 days as a result of the pandemic, but with a caveat that “the consumer provides additional information that is relevant to the investigation during the 30-day period.”
“The Bureau is aware that some consumer reporting agencies and furnishers may face significant operational disruptions that pose challenges for them in investigating consumer disputes,” the policy statement said. “For example, some consumer reporting agencies and furnishers may experience significant reductions in staff, difficulty in taking disputes, or lack of access to necessary information, rendering them unable to investigate consumer reporting disputes within the timeframes the FCRA requires.”