On March 27, 2020, the president signed into law the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, in response to the national emergency arising from the COVID-19 pandemic. Four key provisions of the CARES Act are likely to affect mortgage loan servicers: (1) credit protection; (2) a moratorium on foreclosures; (3) forbearance on mortgage payments; and (4) a moratorium on eviction filings. Compliance with the CARES Act may be straightforward for moratoriums but more challenging for credit reporting and regulatory compliance. This post provides an updated summary of salient portions of the CARES Act and identifies potential regulatory compliance pitfalls.
Summary of the CARES Act
- Amendment to the Fair Credit Reporting Act
The CARES Act amends the Fair Credit Reporting Act (FCRA) to require furnishers of credit information who make an accommodation that the consumer satisfies to report the credit obligation or account as current unless the account was delinquent before the accommodation. See 15 U.S.C. § 1681s-2(a)(1)(F)(ii)(I)-(II). The amendment is potentially retroactive, defining the covered period from January 31, 2020, to the later of July 25, 2020, or 120 days after the termination of the national emergency. See 15 U.S.C. § 1681s-2(a)(1)(F)(i)(II). Accommodations are defined broadly to include forbearances under the CARES Act in addition to a loan servicer’s deferment of payments, loan modifications, or other assistance or relief granted to a consumer affected by the COVID-19 pandemic during the covered period. See 15 U.S.C. § 1681s-2(a)(1)(F)(i)(I).