A California consumer achieved a huge victory against the mortgage lender and debt buyer Ocwen Loan Servicing, LLC.
Under California law, creditors typically can't sue a homeowner who lets the home go in a foreclosure sale. See Cal. Code Civ P. §§ 580b and 580d. Yet, Ocwen Loan Servicing was still reporting a debt on the credit report of Jeffrey Kuns. Thus, even though Mr. Kuns was no longer liable for the mortgage debt after the foreclosure sale of his home, Ocwen told credit reporting agencies that he still owed the money. As a result, Mr. Kuns sued Ocwen for violating the California Consumer Credit Reporting Agencies Act by incompletely or inaccurately reporting on his credit report.
Under the California Consumer Credit Reporting Agencies Act ("CCRAA"), a creditor may not report information that it "knows or should know . . . is incomplete or inaccurate." Cal. Civ. Code § 1788.25(a). The Ninth Circuit Court of Appeals said, while "incomplete or inaccurate" is not defined under the CCRAA, under the federal Fair Credit Reporting Act and similar provisions of the CCRAA, the Ninth Circuit previously held that "an item on a credit report can be " ' incomplete or inaccurate' . . . because it is misleading in such a way and to such an extent that it can be adversely to affect credit decisions." Carvalho v. Equifax Info. Servs., 629 F.3d 876, 890 (9th Cir. 2010) (quoting Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1663 (9th Cir. 2009)).
The Ninth Circuit went on to conclude that because courts should interpret the FCRA and CCRAA consistently, the term "incomplete or inaccurate" requires that companies that report consumers to credit reporting agencies (known as furnishers) like Ocwen must refrain from making any reports that are obviously wrong or missing crucial data, and must not make reports that are materially misleading.
In plain language, given that Ocwen could no longer collect the mortgage deficiency balance from Mr. Kuns, the Ninth Circuit found that Mr. Kuns could sue Ocwen for inaccurately reporting the mortgage deficiency balance on his credit report in violation of California law.