11th Circuit Dismisses FCRA Claims Based on Reporting a Loan in Forbearance Program as Delinquent

The U.S. Court of Appeals for the Eleventh Circuit recently dismissed claims for Fair Credit Reporting Act violations against a large national bank.

The bank was the servicer of the plaintiff’s loan.  When the plaintiff enrolled in an unemployment forbearance program, the bank reduced the monthly amount plaintiff was required to pay.  As part of this program, plaintiff acknowledged that her loan would be considered delinquent on the payments during the forbearance program.  Plaintiff successfully completed the forbearance program, and eventually paid the balance of the loan through a sale of the home.  After the balance on the loan was paid off, plaintiff attempted to purchase a home, for which the plaintiff was denied financing.  The plaintiff’s credit report correctly identified the paid-off loan as having had delinquent payments on it prior to payoff.

FCRA requires, among other things, that companies furnishing consumer information to credit reporting agencies report that information accurately.  The plaintiff claimed that because the credit report indicated “past due” and “delinquent” for prior payments, the bank had failed to report accurate information in violation of FCRA.  The district court granted summary judgement to the bank, explaining that “the undisputed material facts demonstrated that [the plaintiff’s] reduced payments, although timely under the Plan, were not the payments she was contractually bound to make under the Note.”  The Eleventh Circuit affirmed.

The Eleventh Circuit emphasized the limits to the bank’s reporting obligation, explaining that the bank was required only to furnish information to credit reporting agencies regarding the Note signed for the loan, not “every agreement it formed” with the plaintiff.  The court explained that the unemployment forbearance program would not impact the accuracy of information reported regarding the original Note unless the program legally modified the Note, which the court held it did not.  Therefore, the court determined that the plaintiff’s compliance with the program had “no bearing on the accuracy of the information” regarding compliance with the original Note.  The court held that reporting the plaintiff’s obligations under the Note as “past due” and “delinquent” was accurate because the plaintiff was not paying the full payments under the Note.

The opinion Felts v. Wells Fargo Bank is accessible here.