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Fair Credit Reporting Act Lawsuit

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Mark Cappel
UpdatedFeb 9, 2010
Key Takeaways:
  • Hire an attorney who is experienced in consumer law. You may find one who will work on a contingency basis. Ask the attorney to file a lawsuit against Bank of America for making inaccurate reports to the credit reporting agencies in violation of the FCRA.

Bank of America reports our old second mortgage is late each month. How do I convince BofA to stop reporting it as delinquent?

My husband and I had two home loans through Countrywide. They split the home cost 80/20 (99K and 24K). Both loans were exactly alike, all the way down to the periods. Through a HUGE mess (the minute details are looooong), the home was foreclosed on. However, right before the home was sent to the Courthouse steps for auctioning, Countrywide sold the smaller loan. So, the house sold for 107K. Three years later, when we thought it was 'safe' to try and buy another home, we were told that the smaller loan was currently being reported to the credit bureau as 180+ days late every month. This was causing our credit score to plummet. However, the larger loan showed foreclosure and that it had a zero balance.... I disputed my credit report with credit bureau stating that the house had foreclosed on and received a letter stating that the 24k was deleted from my report. Two days later, my husband's cell phone started ringing off the hook from the collection agency that apparently purchased the loan....and the credit bureau would not delete the loan from my husband's report. (I do not know if the loan re-appeared on my credit report...can they do that?!) Then, right after Bank of America (I bank with them) purchased Countrywide, the loan appeared on my online banking information showed the 24k loan as due. I never received a notice, a call, nothing....I called Bank of America and was flat out told by the clerk to pay both loans and that they would soon start withdrawing a monthly payment from my account to cover the expense of the loan (without my permission). Still hasn't happened, by the way - thankfully.... I am just so confused because after numerous conversations with the FTC, the attorney general's office, etc, all state that this second loan should have been part of the foreclosure process and the approximate 7k that was 'overpaid' to the other loan should have gone toward the second loan. They also state that the second loan should be notated and treated as a foreclosure as well and shouldn't be continually reported as being late each month. But, Countrywide didn't even try to auction off the second loan with the first...No one can seem to help me understand why Countrywide did what they did and if what was done was 'legal.' Because of this situation, I will NEVER be able to get into another home.

First, dispute the listing in question. You mentioned you have already, but for the sake of readers who are unfamiliar with the process, read the resource Dispute Credit Report. If your disputing the report is fruitless, then you need to take more drastic measures.

File a lawsuit

Under the Fair Credit Reporting Act, providers of data to the consumer credit reporting agencies are required to report accurate (Section 623(a)(1)), complete and updated information (Section 623(a)(2)). When Bank of America / Countrywide makes inaccurate reports to the credit reporting agencies, Bank of America / Countrywide is in violation of the FCRA.

Hire an attorney who is experienced in consumer law. You may find one who will work on a contingency basis. Ask the attorney to file a lawsuit against Bank of America / Countrywide for making inaccurate reports to the credit reporting agencies in violation of the FCRA.

It would be nice to walk away with some damages, but that is not the point of filing a lawsuit against the creditor here. The point is to resolve the inaccurate report.

Debt following foreclosure

Of course, that assumes the report is inaccurate. The facts in your message are bit unclear, but you mentioned that the proceeds of the foreclosure did not cover the balance of the first and second mortgage. If that is the case, then you may have no cause of action against Bank of America because what the bank is reporting to the credit reporting agencies is accurate.

In general, if the sale price of a foreclosed property is less than the value of the mortgages held against it, then in some states the homeowner could still owe an unsecured balance called a deficiency balance or deficiency judgment. The good news is that this new deficiency balance (if it exists and if your lenders pursue it) is an unsecured debt that may be enrolled into a debt settlement program.

In some states (such as California) and in some circumstances, the second mortgage may be what is called a non-recourse loan. A non-recourse loan means that the lender has no recourse to collect any deficiency balance against the borrower. Its only recourse is the security on the property itself. You will need to review your loan documents and state laws to determine if your second mortgage is a non-recourse loan.

Before you launch into a lawsuit against Bank of America, contact an attorney in your state who is experienced in property law to determine if you owe Bank of America the deficiency balance. Then determine for certain if your old mortgages are recourse or non-recourse. Finally, if Bank of America is violating the FCRA, then consider a lawsuit.

To learn more about your options for resolving debt, see the resource Consolidate My Debt.

I hope this information helps you Find. Learn & Save.



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BBill, Jun, 2010
A key issue in your question is whether the second was a purchase money loan. The second was a purchase money loan if it was simultaneous with the first. Consult with an attorney in California who has experience litigating CCP § 580, the California civil procedure code section that covers deficiency balances. If you are correct and your second deed of trust is covered by § 580, then I agree with your analysis and you should have no liability for the second. If you have no liability for the deficiency it may not be reported to the credit reporting agencies. Again, your key issue is whether the second is covered by § 580.
PPAUL, Jun, 2010
I have a question? I had a 80/20 100% financed mortgage loans and foreclosed in 2008. Since I kept my 100% financed loans intact I was able to get debt forgiveness on my 1st loan (1099a & 1099c) and my 2nd loan was a non-recourse. Question? I fought with the mortgage company to give me my debt forgiveness papers on my 2nd loan however I was told that my 2nd is non-recourse and irs regulations do not require me to receive any debt forgiveness tax forms. the mortgage company reported my 2nd loan to the credit bureaus (1 bureau as debt balance zero/ 2nd bureau as in foreclosure process still (wrong - forclosed & sold in dec 2008) and 3rd bureau as "150 days late 21 times (wrong again).question i ask is can i have my 2nd non recourse loan deleted from my credit report? My reasoning is that this is a non-pursuable debt which is illegal due to the PURCHASE MONEY MORTGAGE LAW RULE in California. So I have proof that the info on my credit report is inaccurage HOWEVER it's NOT A LEGAL VALID DEBT THEREFORE CAN I GET IT REMOVED OFF MY CREDIT REPORT? THIS SHOULD HELP MY CREDIT SCORE..MY 2ND IS FOR NEARLY $70K. WHAT IS UR ANSWER?THANKSPaul
MMS, May, 2014
Hey Paul, I realize your post is two years old but I have the same issue and want to know if you were able to solve it. When I say same issue it really means identical. Any bits of wisdom you may be able to share, please? Thanks!