Credit reporting, forbearance, and skips
Amid the ongoing national emergency, NAFCU has blogged about skip payments for open-end and closed-end credit and forbearance agreements. If a credit union provides this type of relief to its members, how does that affect how a credit union reports these loans to a credit reporting agency? The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) explains what is required if a credit union provides relief to its members during the national emergency.
Section 4021 of the CARES Act amends section 623(a)(1) of the Fair Credit Reporting Act (FCRA) and prescribes how credit unions furnish information to credit reporting agencies during the COVID-19 national emergency if they make accommodations as defined in the CARES Act. An accommodation under the CARES Act is an agreement to defer payments, accept partial payments, forbear delinquencies, modify loans, or provide any other relief to members affected by the COVID-19 pandemic during the period beginning January 31, 2020 and ending 120 days after the COVID-19 national emergency ends. The FCRA amendment requires credit unions that make one or more accommodations on a credit account to furnish information to the credit reporting agencies in one of two ways. If a member is current before an accommodation is made, the CARES Act requires reporting the credit account as current. If the account was delinquent before the accommodation, then the CARES Act requires continuing with the delinquent reporting while the accommodation is in place unless the member becomes current during the accommodation. If that happens, the CARES Act mandates that the account be reported as current.
With the credit reporting requirements included in the CARES Act, you may wonder whether there are any additional resources that might be helpful in documenting a credit union’s reporting obligations when there is a forbearance or a deferral of payments. The Consumer Data Industry Association (CDIA) has provided several useful resources about how to furnish information under these circumstances.
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