A District Court judge in Delaware has denied a plaintiff’s motion for summary judgment and partially granted a defendant’s motion in a Fair Credit Reporting Act case involving how information should have been furnished to the credit reporting agencies related to payments during the COVID-19 pandemic. The case centers on whether a mortgage servicer properly investigated and corrected credit reporting after receiving consumer disputes tied to a trial payment plan and a permanent loan modification that occurred during the CARES Act accommodation period.
The background: The plaintiff filed suit, alleging the defendant violated the FCRA by failing to properly investigate and correct inaccurate credit reporting after receiving notices of dispute sent through a credit reporting agency in September 2021 and July 2022. The dispute stemmed from how the defendant reported the status of the plaintiff’s mortgage loan during and after a trial payment plan and subsequent permanent loan modification.
- The loan was delinquent when it was transferred to the defendant in May 2020. The plaintiff later entered into a trial payment plan, followed by a permanent modification agreement that was signed by the plaintiff and delivered to the defendant in early September 2021.
- The plaintiff disputed the reporting shortly thereafter, arguing that payments made under the trial plan and modification should have been reflected as current.
The ruling: Judge Richard G. Andrews of the District Court for the District of Delaware granted summary judgment to the defendant for the July 2022 dispute, finding that the undisputed evidence showed the defendant investigated and corrected any inaccuracies tied to that notice. However, the court denied summary judgment as to the September 2021 dispute.
- A key issue was whether the defendant should have reported the account as current after countersigning the permanent loan modification but before the modification was formally “booked” internally. Judge Andres noted that the defendant provided no explanation of what booking involved or why it prevented earlier reporting.
- The judge also rejected the defendant’s argument that CARES Act amendments excused the reporting, emphasizing that while the Act required maintaining delinquent status during accommodations, it did not clearly justify the delay once the permanent modification was executed.
