Wrong Information Regarding CARES Act on Some Mortgage Loan Servicer Websites: HUD Press Release

Some Mortgage Loan Servicers’ Websites Offer Information about CARES Act Loan Forbearance That Is Incomplete, Inconsistent, Dated, and Unclear

04/28/2020

The U.S. Department of Housing and Urban Development Office of Inspector General assessed what information servicers of mortgage loans that the Federal Housing Administration (FHA) insures were providing on their public facing websites to borrowers regarding forbearance. 

On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to provide economic relief to individuals and businesses impacted by the COVID-19 pandemic.  On April 17, 2020, 22 days after enactment of the Act, we reviewed the top 30 servicers’ websites to identify readily accessible information for borrowers related to the COVID-19 crisis.

Our review of the 30 servicers’ websites, which service approximately 90 percent of FHA loans, revealed that those websites provided incomplete, inconsistent, dated, and unclear guidance to borrowers related to their forbearance options under the CARES Act.  HUD OIG plans to initiate additional work related to forbearance offered by FHA servicers under the CARES Act.

CARES Act Payments Cannot Be Seized by Debt Collectors: Maryland Attorney General Brian Frosh

ADVISORY: Stimulus Payments Provided by CARES Act Cannot Be Seized by Debt Collectors or Creditors 

BALTIMORE, MD (April 30, 2020) - Maryland Attorney General Brian E. Frosh today issued an Advisory about stimulus payments being issued to Maryland residents as part of the federal Coronavirus Aid, Relief and Economic Security (CARES) Act. On April 29, 2020, the Governor issued Executive Order 20-04-29-03 prohibiting financial institutions from garnishing this financial assistance, except as related to child support.

The CARES Act provides cash assistance to individuals and families subject to certain eligibility criteria. Specifically, the Act provides for a one-time cash payment in the form of a refundable tax credit in the amount of $1,200 for each eligible individual and $2,400 for eligible individuals filing a joint return, plus an additional $500 for each dependent child. Individuals with higher incomes will receive a smaller payment or no payment.

The payments under the CARES Act are intended to be emergency support for the basic needs of tens of millions of Americans, such as paying for rent, mortgages, and food. Therefore, the CARES Act exempts the stimulus payments from collection for debts owed to state and federal governments.

The Governor’s Executive Order also prohibits garnishment of the payments (except as related to child support) and prohibits Maryland banks and credit unions from using stimulus payments to offset debts. The stimulus payments are to be treated as protected payments, similar to other benefit payments provided to Maryland residents for essential needs.

Violations of the Executive Order are a violation of Maryland’s Debt Collection Practices Act and Consumer Protection Act and are subject to enforcement and penalties. Under the Maryland Debt Collection Practices Act, it is illegal for a person collecting a consumer debt to “[c]laim, attempt, or threaten to enforce a right with knowledge that the right does not exist.” The Consumer Protection Act also prohibits any unfair, abusive, or deceptive practices in the collection of consumer debts. A person violating the Consumer Protection Act is subject to paying injunctive relief, restitution, and civil penalties of up to $10,000.00 per violation.

Fight to Protect Cosumer Credit During Coronavirus Pandemic: Maryland Attorney General Frosh

Attorney General Frosh Joins Multistate Coalition Fighting to Protect Consumer Credit During Coronavirus Pandemic

BALTIMORE, MD (April 28, 2020) – Maryland Attorney General Brian E. Frosh today joined a coalition of 22 attorneys general warning the nation’s three Consumer Reporting Agencies (CRAs) that, as Americans continue to struggle from the economic fallout of the COVID-19 public health crisis, they will not hesitate to enforce safeguards set in place to ensure consumers’ credit is properly protected and that their credit reports are fairly and accurately reported.

In a letter to Experian Information Solutions, Inc.; Equifax Information Services, LLC; and TransUnion LCC, the coalition outlines their commitment to enforcing the consumer credit protections outlined in the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed last month, as well as in the Fair Credit Reporting Act (FCRA), despite the federal government’s failure to commit to enforcing these protections.  The letter emphasizes that the coalition will continue to actively monitor and enforce compliance during the COVID-19 crisis and will hold the CRAs accountable for failure to meet their obligations.

“The CARES Act makes clear that consumers can receive assistance from the federal government without it becoming a stain on their credit.  CRAs must honor the consumer protections in the CARES Act.  If they fail to do so, our office will enforce the law to protect the Marylanders who have suffered during this crisis,” said Attorney General Frosh. 

In March 2020, Congress enacted the CARES Act to extend relief to struggling consumers, including an amendment to the FCRA enabling consumers to obtain CARES Act relief without incurring lasting harm to their credit scores.  To prevent such harm, the CARES Act requires furnishers to report a credit obligation as “current” if the obligation was current prior to the grant of a CARES Act accommodation.  The FCRA also protects consumers by requiring CRAs to promptly investigate when consumers dispute the accuracy of information on their credit report.  But under the Trump administration, the Consumer Financial Protection Bureau recently issued guidance indicating it will not enforce certain requirements of the FCRA during the COVID-19 crisis.

In today’s letter, the coalition warned the three CRAs that if the federal government is not protecting consumers, each state will enforce the requirements of the FCRA and individual agreements between CRAs and states to conduct meaningful and timely investigations of consumer disputes of credit information. 

“This CARES Act provision is critically important both to individual consumers and to the overall recovery of the economy because it ensures that consumers obtain essential relief without jeopardizing their future ability to secure employment, rent or buy a home, obtain a credit card, or purchase a car,” the attorneys general write in their letter.  “The state attorneys general expect compliance with this vital provision of the CARES Act, and we will actively monitor for and enforce such compliance.”

The coalition urges CRAs to meet their obligations under the law to protect consumers against incorrect information in their credit reports, which could prevent them from undertaking activities they would have been able to do before the COVID-19 pandemic began.

Today’s letter follows a letter the coalition sent to the Consumer Financial Protection Bureau on April 13, urging the agency to rescind its announcement that it would not enforce certain provisions of the CARES Act and the FCRA.

Joining Attorney General Frosh in signing today’s letter are the attorneys general of California, Colorado, Delaware, the District of Columbia, Hawaii, Illinois, Iowa, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, Virginia, Washington, and Wisconsin.