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Taking on FedLoan Servicing with FCRA 623(a)(2) dispute

Regular Contributor

Re: Taking on FedLoan Servicing with FCRA 623(a)(2) dispute

Sent a rather strongly worded letter to FLS today, they should get it Friday. In it I said that, despite their corporate policy of not updating credit reporting based on retroactive forbearances, they are legally required to update their reporting per the FTC's opinion on the matter, and enclosed yet another copy of the FTC's advisory opinion.

 

I stated that their willful refusal to uphold their legal obligation has caused financial damages and they've got 14 days from the date of receipt of the letter to fix their credit reporting as is their legal duty and send me written notification certifying as such, otherwise I will file a lawsuit claiming financial damages.

 

Ball's in their court now, I'm looking forward to their response!

Starting scores as of 8/14: Low/mid 500s
myFICO 08 scores as of 12/17/17: EX: 741, TU: 739; EQ: 714 | Mortgage scores as of 12/17/17: EX02: 695, TU04: 687, EQ05: 683
Original Goal: FICO 8 700 across the board and mortgage scores above 680 by 11/1/17...Done!!
New Goal: FICO 8 750 across the board and mortgage scores above 700 by 7/1/18
Currently ~$100k in available credit
Message 21 of 29
Regular Contributor

Re: Taking on FedLoan Servicing with FCRA 623(a)(2) dispute

Ah, I was finally able to access the the PDF they attached to the CFPB complaint. Here's the relevant text:

 

Your concern, as we understand it, is that you feel your credit reporting on your underlying loans included in the consolidation process should have been absolved of all previous unfavorable information when these loans were retroactively placed on a period of forbearance. In addition, you feel that, by refusing to remove prior unfavorable reporting, FedLoan Servicing is violating the Fair Credit Reporting Act (FCRA).


We are obligated to report true and accurate information under the FCRA (15 U.S.C. § 1681s-2). Our review of your account found that the information submitted to the nationwide consumer reporting agencies accurately reflected the status of your loans at that time. Consequently, we are unable to accommodate your request to remove the reporting. Altering accurate information, even as a one-time courtesy, is not permitted under the law and would jeopardize the integrity of our reporting.
In addition, our legal team has reviewed your complaint and statements regarding Section 623(a)(2) under the FCRA (15 U.S.C. § 1681s-2) and found your arguments to be without merit. You are interpreting the FCRA to imply that FedLoan Servicing is not accurately reporting your credit information, when, according to our records, it is and has since we have been servicing your loans.


After your loans were reported unfavorably in 2013, you requested a period of forbearance on January 14, 2014. The approval of the forbearance period brought your account into a current status and resolved the delinquency. The delinquency existed because you were past due on your student loans at the time of the unfavorable reporting. By resolving your delinquency and bringing your account current, that action allowed your past due bills to be satisfied and your loans to be reported favorably going forward. It did not, however, retroactively remove the unfavorable remarks that had already been reported accurately on your credit history.

As a servicer of federal student loans owned by the U.S. Department of Education, Federal Student Aid, we must follow the guidance of the Department. FedLoan Servicing has received guidance from the Department that no prior unfavorable credit reporting, that was reported accurately at the time, shall be absolved by the application of a retroactive deferment or forbearance. FedLoan Servicing must follow the guidance of the Department. Unless FedLoan Servicing receives direction from the Department, we are, unfortunately, unable to accommodate your request to remove the unfavorable information.

 

Per FLS's explanation here, it looks like there's a disagreement between the Dept of Ed and the FTC on how retroactive forbearances are treated. If that's the case, looks like this potential lawsuit will need to name both Dept of Ed and FLS?

 

I'll see what FLS comes back with in response to the letter I sent them earlier this week, but if they don't roll over, I'll have to take this back to my lawyer and see what the appropriate next step is.

Starting scores as of 8/14: Low/mid 500s
myFICO 08 scores as of 12/17/17: EX: 741, TU: 739; EQ: 714 | Mortgage scores as of 12/17/17: EX02: 695, TU04: 687, EQ05: 683
Original Goal: FICO 8 700 across the board and mortgage scores above 680 by 11/1/17...Done!!
New Goal: FICO 8 750 across the board and mortgage scores above 700 by 7/1/18
Currently ~$100k in available credit
Message 22 of 29
Highlighted
New Member

Re: Taking on FedLoan Servicing with FCRA 623(a)(2) dispute

Hi, habu987 - Any movement on this?  I've been watching your thread in anticipation of any good resolve.  I'm in the same situation.

Message 23 of 29
Regular Contributor

Re: Taking on FedLoan Servicing with FCRA 623(a)(2) dispute

Hi Lane.

 

Nope, no movement. I sent them a letter 3 weeks ago saying that if they didn't update their reporting and notify me in writing of the update within 14 days of receipt of my letter, I was going to sue for financial damages. That deadline came and went on 9/23, so I'm going to get back with my lawyer this week to initiate the lawsuit.

Starting scores as of 8/14: Low/mid 500s
myFICO 08 scores as of 12/17/17: EX: 741, TU: 739; EQ: 714 | Mortgage scores as of 12/17/17: EX02: 695, TU04: 687, EQ05: 683
Original Goal: FICO 8 700 across the board and mortgage scores above 680 by 11/1/17...Done!!
New Goal: FICO 8 750 across the board and mortgage scores above 700 by 7/1/18
Currently ~$100k in available credit
Message 24 of 29
Community Leader
Super Contributor

Re: Taking on FedLoan Servicing with FCRA 623(a)(2) dispute


habu987 wrote:

Ah, I was finally able to access the the PDF they attached to the CFPB complaint. Here's the relevant text:

 

Your concern, as we understand it, is that you feel your credit reporting on your underlying loans included in the consolidation process should have been absolved of all previous unfavorable information when these loans were retroactively placed on a period of forbearance. In addition, you feel that, by refusing to remove prior unfavorable reporting, FedLoan Servicing is violating the Fair Credit Reporting Act (FCRA).


We are obligated to report true and accurate information under the FCRA (15 U.S.C. § 1681s-2). Our review of your account found that the information submitted to the nationwide consumer reporting agencies accurately reflected the status of your loans at that time. Consequently, we are unable to accommodate your request to remove the reporting. Altering accurate information, even as a one-time courtesy, is not permitted under the law and would jeopardize the integrity of our reporting.
In addition, our legal team has reviewed your complaint and statements regarding Section 623(a)(2) under the FCRA (15 U.S.C. § 1681s-2) and found your arguments to be without merit. You are interpreting the FCRA to imply that FedLoan Servicing is not accurately reporting your credit information, when, according to our records, it is and has since we have been servicing your loans.


After your loans were reported unfavorably in 2013, you requested a period of forbearance on January 14, 2014. The approval of the forbearance period brought your account into a current status and resolved the delinquency. The delinquency existed because you were past due on your student loans at the time of the unfavorable reporting. By resolving your delinquency and bringing your account current, that action allowed your past due bills to be satisfied and your loans to be reported favorably going forward. It did not, however, retroactively remove the unfavorable remarks that had already been reported accurately on your credit history.

As a servicer of federal student loans owned by the U.S. Department of Education, Federal Student Aid, we must follow the guidance of the Department. FedLoan Servicing has received guidance from the Department that no prior unfavorable credit reporting, that was reported accurately at the time, shall be absolved by the application of a retroactive deferment or forbearance. FedLoan Servicing must follow the guidance of the Department. Unless FedLoan Servicing receives direction from the Department, we are, unfortunately, unable to accommodate your request to remove the unfavorable information.

 

Per FLS's explanation here, it looks like there's a disagreement between the Dept of Ed and the FTC on how retroactive forbearances are treated. If that's the case, looks like this potential lawsuit will need to name both Dept of Ed and FLS?

 

I'll see what FLS comes back with in response to the letter I sent them earlier this week, but if they don't roll over, I'll have to take this back to my lawyer and see what the appropriate next step is.


Notice how they completely avoid using the term "retroactive forebearance" anywhere in their reply, which is the crux of the issue. Rather telling....

Most Recent FICO 8 Scores EX616/TU587/EQ607 01/09/2018 Starting scores 553/485/543 08/25//2017
~~~Credit lines~~~~
SDFCU VISA Secured $250
Discover Secured $200
Message 25 of 29
Regular Contributor

Re: Taking on FedLoan Servicing with FCRA 623(a)(2) dispute

I've been following this and I fought Fedloan Servicing through the CRA,cfpb, and the ombudsmen group for over a year. Nothing changed. It's now been a little over 2 years since the lates happened and I'm in hopes that you get some movement in the right direction and I will more then likely take them in again using your method. Good luck
Message 26 of 29
Regular Contributor

Re: Taking on FedLoan Servicing with FCRA 623(a)(2) dispute

Checking in to see what if anything your lawyer said. I am watching this to see if your lawyer has any traction to see if I should get a lawyer involved in mine. No point reinventing the wheel.

Starting Scores: September 2015 minus 500 across the board
Current Scores: October 2017 EQ: 715 TU: 710 EX: 716
In My Wallet:
Cap1 QS: $4.8K - AMEX BCP: $4.2K - Old Navy Visa: $7K - Nordstrom $3.8K - VS $500 (FTW!)
BofA AU: $12K AMEX AU: $25K
Business: AMEX BCP $15K
Message 27 of 29
Regular Contributor

Re: Taking on FedLoan Servicing with FCRA 623(a)(2) dispute

Closing the loop on this one...

 

I put everything on pause at the end of September. Had a surprise layoff and was out of work until a few weeks ago, so I didn't make any movement on anything.

 

My lawyer wanted a $1500 fee to file the case, so I'm planning to file suit in small claims court in March, instead. I intend to ask for $5,000 in damages (maximum allowed in Virginia) and the removal of the lates in their reporting.

Starting scores as of 8/14: Low/mid 500s
myFICO 08 scores as of 12/17/17: EX: 741, TU: 739; EQ: 714 | Mortgage scores as of 12/17/17: EX02: 695, TU04: 687, EQ05: 683
Original Goal: FICO 8 700 across the board and mortgage scores above 680 by 11/1/17...Done!!
New Goal: FICO 8 750 across the board and mortgage scores above 700 by 7/1/18
Currently ~$100k in available credit
Message 28 of 29
New Contributor

Re: Taking on FedLoan Servicing with FCRA 623(a)(2) dispute

Please let me know how this goes as I am in the EXACT same boat. I have a string of lates ranging from 30-to-120 day lates when I had some financial issues helping family. I was granted a retroactive forbearance by FedLoan to cover all of the time periods, however they REFUSE to update the reporting to reflect this.

 

I even requested a letterhead of, "..a confirmation of all of the months during which my account was in a forbearance status." They provided me with a breakdown of all of the dates and confirmed that my account had been in a General Forbearance during the periods they had granted it..

 

I've since sent in 16 disputes to all three credit bureaus to no avail. I did get ONE response from TransUnion saying the lates were being removed, and they were, but they all reappeared the following month and TU/FedLoan have refused to remove them again.

 

I was told to submit a complaint to the CFPB, however they said that since my case is a federal loan my complaint must be submitted to the Federal Student Loan Ombudsman Group.

 

When I submitted my complaint to the Ombudsman Group, they told me the case had to be handled by the Federal Student Aid Feedback page/group. When I submitted that complaint, they replied saying they do not grant "courtesy adjustments" and closed my case.

 

Moral of the story: The CFPB, Ombudsman Group, Federal Student Aid Feedback group and all three credit bureaus are USELESS and clueless when disputing FedLoan lates. It is simply not possible, they do not care, and it's nothing but a joke.. Lawsuits are the only way.

 

FedLoan is a complete cluster!%@$ when it comes to handling their credit reporting. They've made repeated attempts and responded to countless messages, complaints, and provided me with a multitude of PDF documents about my account's forbearance status all to AVOID correcting their invalid reporting.

 

Hiring a lawyer myself and will update on the progress.

Message 29 of 29