FCRA Might Be Fertile Ground for Individual and Class Actions Especially under CFPB Rules

Why This “Boring” Statute Matters

In a world where access to credit often outweighs access to savings, FCRA protections are crucial. History shows that dry statutes can bring down major offenders (think mail fraud in The Firm, tax evasion for Al Capone). Likewise, the FCRA can be the pressure point that changes outcomes for homeowners.

CFPB Focus: Debt Collection & FCRA Reporting

The Consumer Financial Protection Bureau is digging into debt collection and credit reporting under the FCRA. Key point: credit reporting agencies are not government entities—yet they must perform due diligence and a reasonable investigation when a consumer disputes negative information.

Why Negative Credit Reporting Blocks Refinancing

Your home’s value often converts to usable equity only if lenders will extend credit. According to the article, investment banks benefit when legitimate refinancing is hard to obtain. Standard refinance conditions require the old “lender” (or successor) to prove ownership of the receivable and priority lien position—proof that, the article contends, is routinely sidestepped, with title insurance wrongly treated as a substitute for title.

Result: Negative credit reporting becomes the easiest way to block access to funds, keeping the “old creditor’s” unproven claims from ever being scrutinized.

The Legal Mechanism You Can Use: 15 U.S.C. § 1681i(a)(1)(A)

There is a tool to fight back: FCRA’s reinvestigation requirement at 15 U.S.C. § 1681i(a)(1)(A). If you submit a dispute to a credit reporting company (CRC) with a clear summary, exhibits, and reasons, the CRC must conduct a reasonable reinvestigation to determine accuracy.

If the CRC fails to investigate—or does it incorrectly—you can sue the CRC.

In addition, if the furnisher (often the named “servicer”) cannot establish accuracy, the furnisher must withdraw the item or the CRC must remove it. That action alone can bolster a homeowner’s defense narrative in foreclosure.

Quoted CFPB Guidance (Supervisory Highlights)

see cfpb_supervisory-highlights_issue-26_2022-04

2.2.1 CRC duty to conduct reasonable reinvestigation of disputed information
The FCRA requires that a CRC must conduct a reasonable reinvestigation of disputed information to determine if the disputed information is inaccurate whenever the completeness or accuracy of any item of information contained in a consumer’s file is disputed by the consumer and the consumer notifies the CRC directly, or indirectly through a reseller, of such dispute. In several reviews of CRCs, examiners found that CRCs failed to conduct reasonable investigations of disputes in multiple ways. Examiners also found that rather than resolving disputes consistent with the investigation conducted by the furnisher, which in many instances would have required correcting inaccurate derogatory information and replacing it with accurate positive information, CRCs simply deleted thousands of disputed tradelines. Examiners also found that CRCs failed to conduct reasonable dispute investigations when they failed to review and consider all relevant information submitted by the consumer in support of their disputes. After identification of these issues, CRCs were directed to cease violating the FCRA’s dispute investigation requirements. [e.s.]

Translation for consumers: submit organized disputes (summary + evidence). The CRC must take real steps to verify accuracy.

How This Supports Foreclosure Defense

If a CRC removes or the furnisher withdraws derogatory data, you can allege that the putative “servicer” and “creditor” cannot corroborate their claimed rights to administer, collect, and enforce any obligation—despite statutory and contractual duties (FCRA, FDCPA, RESPA as asserted in the article).

This raises the broader issue posed by the article: if “creditor” and “loan account” have effectively been eliminated by complex banking strategies, can there be lawful collection without a creditor, loan account, or risk of loss?

Practice Hint

PRACTICE HINT: Obtain a forensic investigation report as soon as possible. Being “current” can be irrelevant—or harmful—if you’re making payments on a non-existing debt to a nonexistent creditor (as asserted).

Calls to Action

Support the Work

DID YOU LIKE THIS ARTICLE?
This content is self-funded and supported by donations. The mission: stop foreclosures and collection efforts without proof of loss.
Please Donate to Support Neil Garfield’s Efforts to Stop Foreclosure Fraud.
CLICK TO DONATE

Free Review & Services

FREE REVIEW: Don’t wait, Act NOW!
CLICK HERE FOR REGISTRATION FORM. It’s free, no obligation, and private. You’ll usually receive an email response within 24 hours.

FORECLOSURE DEFENSE IS NOT SIMPLE. NO GUARANTEES.
These comments focus on the ability to win, not merely settle. Foreclosure mills aim to wear you down; meaningful settlements often occur at the 11th hour of litigation.

Pre-enforcement challenges to “servicers” and other claimants can delay action for years and—though rare—can result in a free-and-clear homestead (no guarantee).

Yes, you DO need a lawyer.
To retain Neil F. Garfield as a legal consultant, email neilfgarfield@hotmail.com.

Author

Neil F Garfield, MBA, JD (age 75) is a Florida-licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business, accounting, and law. Former investment banker, securities broker, securities analyst, and financial analyst.

Please visit www.lendinglies.com for more information.

Need Help With Your Case?

Call us today at 844.583.5339
Submit your case statement online for a complimentary recommendation.
Visit LivingLies.me for resources and case insights.

Posted in Corruption, foreclosure defenses, Pleading, Servicer |