I am in the process of filing a lawsuit against Navient. base on a discussion with my lawyers, they believe they are in violation of the fair credit reporting act with regard to poisoning our credit report with the "effected by natural disaster" remark for taking the interest free forebearance as part of the CARES act. The CARES act actually ammends the fair credit reporting act with language around not poisoning credit reports.
Was wondering if anyone has taken legal action around the FCRA with lenders before.
The process will start with letters from our law firm to demand removal of the notes the put in our report and go from there.
They said they also know of a lawfirm who is preparing a class action suit against them as our situation seems to be common right now
FCRA lays out a specific order in which things must be done when suing under the FCRA. Here is the order:
1: FCRA damages accrue when a creditor KNOWINGLY places false or misleading information in a consumer's credit file. In this case, it is the notation that the consumer is availing him/herself of the protections of the CARES Act. FCRA prohibits the placing of false or misleading information in a credit file and the CARES Act prohobits any derogatory placements as a result of a person availing themselves of the benefits of the CARES Act. The statement being placed in a consumer's file is put there with the obvious intent of slipping derogatory information into the consumer's file in violation of the CARES Act, knowing that any future lender will see that and take it as a "red flag" on the file. Step 1 is to notify the lender in writing that they are in violation of the FCRA and CARES Act by placing that notation in the consumer's file. Keep in mind that in these unique circumstances, the statement is technically accurate, but the placing of it in a consumer's credit file is illegal, and I would take the position that placing any illegal statement in a consumer's credit file is ipso facto false and misleading. One cannot use one law as a reason or cover to violate a different law.
2: Upon receipt of the notification, the lender must be given a reasonable amount of time in which to fix the isue (i.e. - remove the offending statement). I would give them 30 days which will incorporate a complete billing cycle along with the normal automatic update of the CRA files.
3: After the 30 days are up, re-check the consumer's credit file. If the offending statement is gone, mission accomplished. If the offending statement is still there, dispute it with the CRA pursuant to FCRA.
4: Upon receipt of the dispute, the CRA is required by FCRA to go back to the source of the offending TL and ask if the TL is accurate or not. If the source says it is inaccurate, the source must upload a correction. If the source does not reply to the CRA's inquiry within 30 or 45 days (different actions allow the two different time limits) the TL must be deleted. If the source of the TL verifies the accuracy of the TL (which would necessarily be a reaffirmation of the offending statment) the CRA will notify you that the TL has been verified by the source. Then you are clear to file suit against the source of the TL. Keep in mind that while FCRA has a Private Right of Action, CARES Act does not.
What part of "account affected by natural disaster" is false information? You accepted forbearance that was offered in response to a natural disaster (COVID-19 pandemic). Also, what demonstrable financial loss/hardship have you had because of it?
I didn't request any forbearance and the natural disaster remarks were added to my mortgage. I don't think it's accurate, but I'm not sure it's poisoning my file either. Closed on new home with those remarks in my file.
This is the third thread today I've stated this in, but the remark is purely cosmetic and is meant to give underwriters a possible reasoning to make an exception upon manual review if the account has become delinquent. The remark itself in no way harms your ability to be approved for credit or affects your score. If you live in an area currently being affected by a natural disaster (which would be the *entire* US with the sole exception of American Samoa, fingers crossed) it is a truthful statement. Do you seriously think an underwriter is going to look at your report and suddenly realize that a pandemic has hit your area and he or she may want to take that into consideration since it's not happening to anyone else in the world?
I also have the statement on my credit reports without accepting any relief. Citi and other lenders have put this statement on my credit reports before during times of extreme weather events in Massachusetts. It goes away when the declared emergency ends, is applied to all customers in a given geographic area, and is in no way a reflection on an individual.
Affected by natural disaster.