Even though foreclosure accelerates debt Eleventh Circuit holds it is not inaccurate to report that consumer failed to pay for that period

In Hunt v. JPMorgan Chase Bank, Nat’l Ass’n, No. 18-11306 (11th Cir. Apr. 25, 2019) a consumer filed a class action suit alleging that his lender violated the Fair Credit Reporting Act by reporting him late even after the lender had commenced foreclosure proceedings. He also contended that after he paid the foreclosure judgment, his lender still failed to accurately report to credit reporting agencies that he fully satisfied his obligations under the loan. The district court dismissed the suit and that decision was upheld on appeal to the Eleventh Circuit.

In affirming the district court, the reviewing court was persuaded by the fact that at no point did the consumer dispute that he had failed to pay the loan for two years and that the documents attached to the complaint accurately reported his failure to pay. Because it accurately furnished that information the consumer could not demonstrate that a reasonable investigation of his dispute would have unconverted an inaccuracy in that information. The Court rejected the consumer’s theory that because the filing of the foreclosure and acceleration of the loan relieved him of any obligation to make monthly payments, it was inaccurate to report him delinquent for the period covered by the foreclosure. The Court said he was not relieved of the obligation to make payments during this time and even if he was this was a legal dispute not a factual inaccuracy. “Thus, even assuming [the lender] furnished information that turned out to be legally incorrect under some future ruling, [the lender’s] purported legal error was an insufficient basis for a claim under the FCRA.”

The Court also upheld the district court’s ruling that the lender was under no obligation to update credit reporting agencies of the fact that the consumer ultimately paid the paid the foreclosure judgment. The Court side-stepped the question whether a furnisher of information is so obligated, because the consumer’s claim was brought under § 1681s-2(b) of FCRA, which governs a furnisher’s investigatory duties. That subsection requires furnishers to conduct investigations into consumer disputes only upon receiving notification of a dispute from a credit reporting agency. The consumer never alleged that the lender had received such a report, that a credit reporting agency provided notification of any such dispute to the lender, or that he contacted the credit reporting agencies to dispute that aspect of his credit reports. Without receiving notification of a dispute from a credit reporting agency, the lender had no obligation to conduct an investigation.

Download Related Document