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RECAP: Changes to the Fair Credit Reporting Act in the Wake of the Unprecedented COVID-19 Pandemic

With over 22 million Americans currently out of work, the COVID-19 pandemic has proven to be both a global health crisis and a period of economic instability. Over the past few weeks, a number of new regulations have been enacted to ease the financial strain so many Americans are feeling. Here, we focus specifically on the new credit reporting landscape and what credit reporting agencies and data furnishers should know:

Fannie Mae, Freddie Mac and VHA Loans

With the expectation that millions of homeowners would be unable to make their mortgage payments due to the COVID-19 pandemic, in mid-March Fannie Mae, Freddie Mac and the Veterans Administration announced significant policy changes for credit reporting COVID-19 affected loans, including suppression.

Fannie Mae, for example, issued a Lender’s Letter on March 18, 2020 directing servicers to suspend credit reporting “during an active forbearance plan, or a repayment plan or Trial Period Plan where the borrower is making the required payments as agreed, even though payments are past due, as long as the delinquency is related to a hardship resulting from COVID-19.”

The Veterans Administration issued a similar bulletin directing servicers to suspend adverse credit reporting for “affected” loans.

The CARES Act

Section 4021 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020, amended the Fair Credit Reporting Act by adding a new subsection entitled “Reporting Information During COVID-19 Pandemic” to the existing section on “responsibility of furnishers”[1]

Pursuant to the CARES Act, furnishers must report credit information for consumers receiving an accommodation during the “covered period.” The “covered period” is either period beginning on January 1, 2020 and ending on the later of (i) 120 days after the enactment of the CARES Act or (ii) 120 days after the termination of the national emergency declared on March 13, 2020. FULL ARTICLE

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