Homeowners with coronavirus mortgage relief to get protection
Agency vows fixes after Florida couple’s credit score plunges
A federal agency has promised “aggressive action” to protect the credit scores of homeowners who have taken mortgage relief during the COVID-19 pandemic.
Tod and Christin Caviness are Florida homeowners who saw their credit scores plunge after they took mortgage forbearance through the federal CARES Act, designed to help people struggling with loss of income because of the virus.
The couple deferred their $1,358 monthly mortgage payment on their home in Bradenton for three months, but their credit scores didn’t fall until after they paid their first required payment. They have since had their scores restored.
Their story in the Orlando Sentinel inspired U.S. Reps. Stephanie Murphy, D-Winter Park, and Mario Diaz Balart, R-Miami, to send a letter in December to the Consumer Financial Protection Bureau demanding to know why provisions in the CARES Act had failed to protect credit scores.
“These provisions should have prevented outcomes like the one described by the Orlando Sentinel,” they wrote. “The fact that
they did not leads us to question whether Congress’s clear intent in crafting Section 4021 and 4022 is being fully and fairly implemented.”
In a letter dated March 24, CFPB’s acting director David Uejio said he shares concerns “that some companies are failing to properly administer relief through the crisis.”
He said a report by his agency found companies who misreported accounts to the credit bureaus, though he did not say how many companies or name any found to be in violation. In a report by the CFPB, the names of institutions, including those that violated the rules, were omitted “in order to maintain the confidentiality of supervised entities,” the letter said.
Of the 29,000 mortgage complaints the CFPB received last year, 800 were about incorrect credit scores.
“In some of these complaints, consumers described that entering into or exiting a forbearance agreement adversely affected their credit score,” Uejio wrote.
The letter goes on to detail steps the agency has taken to prevent other homeowners from falling victim to misreported credit scores, including reviewing the work at institutions such as banks and credit agencies to make sure they are in compliance with the law.
The CFPB also created a website, cfpb.gov/housing, designed to educate homeowners on tools available through the agency. The website includes a blog entitled “Protecting your credit during the coronavirus pandemic” and a video called “Your Credit and the CARES Act.” They provide information on what should and shouldn’t affect one’s credit score and where to complain if something goes wrong.
The letter did not mention any criminal or civil penalties or investigations for companies that did not comply with the CARES Act provisions.
Murphy said she was happy with the agency’s response.
“I’m pleased the CFPB, in response to our bipartisan request, has said it will take strong action against companies that don’t protect the credit scores of struggling homeowners who enter into mortgage forbearance agreements,” Murphy said in a written statement.
The Caviness family got their credit scores restored last year and have since purchased a house in Sanford. Tod Caviness estimates that it took six weeks to resolve the issue.
“And believe me, it wouldn’t have even happened that soon if it weren’t for the [Orlando Sentinel] story,” he said.