The CARES Act, which includes—among many other things—modifications to credit reporting requirements for data furnishers during the pendency of the pandemic, caused a bit of confusion. On Tuesday, the Consumer Financial Protection Bureau (CFPB) aimed to clear some of that confusion up by releasing an FAQ on the topic of credit reporting during COVID-19.
The seven-page document covers 10 questions on the topic. Many of the questions deal with the CFPB’s policy statement outlining its supervisory and enforcement practices related to the pandemic, which was issued in early April. Below are summaries of the questions and answers.
Furnishers should pay special attention to FAQ 8, which details that reporting a disaster code does not meet the compliance requirements of the CARES Act.
Editor’s Note: While we provide the summaries below, we also encourage our readers to read the FAQs in full due to the sensitive nature of this topic.
Question 1: What did the CFPB’s statement on consumer reporting—issued shortly after the CARES Act was enacted—say?
The CFPB noted that it expected furnishers to comply with the CARES Act, specifically related to the requirements on how to report accounts that were not delinquent prior to COVID-19. The CFPB also indicated that it would consider the individual circumstances of the credit reporting agencies and furnishers when evaluating compliance with requirements to investigate disputes in specific timeframes. The CFPB will be looking to see if the organization made good faith efforts to investigate disputes as quickly as possible. If the organization did not face any “impediments due to COVID-19,” then the normal timeframe applies.
Question 2: What did the CFPB’s statement say about enforcement of the requirement to report as current certain accounts for consumers impacted by COVID-19?
The CFPB states that it expects compliance with the FCRA and the CARES Act, and it “remains committed to vigorously enforcing” applicable laws. The CFPB then reiterates that it will review the specific circumstances of an organization and determine whether the organization made a good faith effort to comply as quickly as possible.
Question 3: What did the CFPB’s statement say about citing and suing furnishers for failure to investigate disputes within specific timeframes?
The CFPB states that it will provide some flexibility with timeframes based on the individual circumstances of the organization, acknowledging that—just like so many other businesses—furnishers faced operational and business challenges during the pandemic. However, the CFPB clarifies:
Statement did not say that the Bureau would give furnishers or consumer reporting agencies an unlimited time beyond the statutory deadlines to investigate disputes before the Bureau would take supervisory or enforcement action. Furnishers and consumer reporting agencies remain responsible for conducting reasonable investigations of consumer disputes in a timely fashion.
Question 4: The CARES Act calls for accommodations to pandemic-impacted consumers—what is an accommodation in this context?
The CFPB defines this as any payment assistance or relief granted to pandemic-impacted consumers during the pandemic. The time frame includes from January 31, 2020, until 120 days after the termination of the national emergency. The CFPB provides examples, such as agreements to defer payments, make partial payments, forbearances, or loan modifications.
Question 5: Are furnishers required to provide accommodations to pandemic-impacted consumers?
The CARES Act requires certain accommodations for two types of loans: mortgages and Federally held student loans. Even if no accommodation is required, the CFPB encourages furnishers to work with borrowers.
Question 6: What are a furnisher’s reporting obligations if it provides an accommodation?
This answer is broken down depending on the scenario:
- If the account was current prior to the accommodation, then the furnisher must continue to report the account as current.
- If the account was delinquent prior to the accommodation, the furnisher cannot advance the delinquent status during the accommodation.
- If the consumer brings the account current during the accommodation, then the furnisher must report it as current.
Question 7: What should furnishers consider when reporting accounts?
The CFPB urges furnishers to look at the information they are reporting for the consumer as a whole. The following example is provided:
[I]nformation a furnisher provides about an account’s payment status, scheduled monthly payment, and the amount past due may all need to be updated to accurately reflect that a consumer’s account is current consistent with the CARES Act. Furnishers are encouraged to ensure they understand the data fields that the consumer reporting agencies to whom they report utilize and which standard data reporting formats may apply.
Question 8: Can furnishers comply with accommodation reporting requirements by using a special comment code, such as a natural or declared disaster or forbearance?
Reporting a disaster or forbearance code does not meet the CARES Act requirement. The CARES Act requires that the account remain current if it was current prior to the accommodation, or not to advance the delinquency if it was delinquent prior to the accommodation. Disaster or forbearance codes do not meet this standard.
Question 9: Can a furnisher report all of the consumer’s accounts as in forbearance?
Since the FCRA requires accuracy and integrity in the information reported, the CFPB states that furnishers should not lump accounts together like this.
Question 10: What must furnishers report when the accommodation ends?
The furnisher cannot report an account as delinquent after the accommodation ends if the consumer met his or her requirements during the accommodation period. Also, “[a] furnisher also cannot advance the delinquency of a consumer that was maintained pursuant to the CARES Act based on the time period covered by the accommodation after the accommodation ends.”