The CFPB recently issued its “Consumer Reporting FAQs Related to the CARES Act and COVID-19 Pandemic,” addressing 10 credit reporting issues. While the FAQs provide some much-needed clarity for furnishers of information and credit reporting agencies, the CFPB left some significant questions unanswered.

Below we breakdown highlights of the FAQs:

• Several of the FAQs — including FAQs 1, 2 and 3 — address the CFPB’s April 1, 2020 “Statement on Supervisory and Enforcement Priorities Regarding the Fair Credit Reporting Act and Regulation V in Light of the CARES Act” (which we previously wrote about). In the April 1 statement, the CFPB announced a flexible supervisory and enforcement approach with regard to credit reporting, particularly as it relates to timeframes for dispute investigations.

  In FAQ 1, the CFPB confirms its flexible approach but notes that it “expects furnishers and consumer reporting agencies to make good faith efforts to investigate disputes as quickly as possible.” The CFPB goes further in FAQ 2, noting that it is still dedicated to enforcing the Fair Credit Reporting Act (FCRA) during the COVID-19 pandemic. The CFPB explains that it “will consider the circumstances that entities face as a result of the COVID-19 pandemic and entities’ good faith efforts to comply with statutory and regulatory obligations as soon as possible” but “will . . . not hesitate to take public enforcement action when appropriate against companies or individuals that violate the FCRA or any other law under its jurisdiction.” FAQ 3 specifically addresses timeframes for responding to consumer disputes, stating that the CFPB will not give furnishers or consumer reporting agencies an “unlimited time” to respond to the disputes.

Overall, the CFPB’s comments in the FAQs point to a less forgiving approach to enforcement than the April 1 statement. While the CFPB still intends to consider individual circumstances, it clearly expects furnishers and consumer reporting agencies to be making progress in meeting the FCRA’s requirements. What might have been considered “good faith” efforts at the start of the pandemic may not be considered “good faith” three months in.

• FAQ 6 addresses the reporting obligations under the CARES Act when a furnisher provides an accommodation to a consumer. The CFPB notes that, where a consumer is given an accommodation and meets the requirements of the accommodation, the consumer’s account status should remain as it was reported prior to the accommodation except where the consumer brings the account current during the accommodation. For example, if the consumer is current before the accommodation, the account should be reported as current during the accommodation; if the account was 30 days delinquent before the accommodation, the delinquency should not be advanced during the accommodation; but, if the consumer brings an account current during an accommodation, the furnisher must report the account as current.
• In FAQ 7, the CFPB notes that furnishers should consider all information that is reported on an account for compliance with the CARES Act. That is, the furnisher should ensure that its reporting on all data fields (such as the account’s payment status, scheduled monthly payment, and the amount past due) is updated consistent with the CARES Act.
• While FAQ 8 states that using a special comment code “is not a substitute for complying with [the CARES Act’s] requirements,” the CFPB does not address the more fundamental question of whether special comment codes noting an accommodation are permitted at all. Does a furnisher violate the CARES Act by using a special comment code to note that a consumer received an accommodation? The CFPB’s FAQs do not address this. Without further information, it seems reasonable to assume that special comment codes may be used along with reporting an account consistent with the CARES Act but cannot be used alone to achieve compliance.
• In FAQ 10, the CFPB notes that the CARES Act’s protections for reporting during an accommodation still apply once the accommodation ends. Accordingly, if the consumer was current before an accommodation and met the requirements of an accommodation, the furnisher cannot report the account as delinquent based on the time period covered by the accommodation after the accommodation ends. Similarly, a furnisher cannot advance the delinquency of a consumer’s account after an accommodation ends based on amounts that went unpaid during the accommodation.

FAQ 10, however, suggests that a furnisher cannot advance a delinquency post-accommodation where a consumer received a forbearance as an accommodation and then fails to make payments after the forbearance period ends. This could lead to a borrower or consumer being in foreclosure while being reported as 30-days delinquent, creating a huge amount of potential confusion given the longer mandatory timeframes for foreclosures in most jurisdictions. For example, consider a scenario where a consumer or borrower of a non-GSE mortgage loan who is current receives a three-month forbearance, with all three payments due at the end of the three-month period as a lump sum payment. After the forbearance period ends, the consumer either fails to make the new monthly payment or fails to repay the forbearance arrearage. Should the consumer be reported as only 30-days delinquent, even though the missed payments stretch over a period of four months? Or can the furnisher consider the fact that the consumer has not made a monthly payment for four months and breached his or her obligation to repay the amount in forbearance and thus report the loan as 120 days delinquent? Application of FAQ 10 may lead to inaccurate and confusing reporting in this situation.

While the CFPB’s FAQs provide some helpful guidance, furnishers are still sure to encounter challenges complying with the CARES Act’s credit reporting obligations, especially as the COVID-19 pandemic continues to cause hardships for consumers.