The Fair Credit Reporting Act (FCRA) protects consumers against inaccurate information on their credit report. All companies that report information to the credit reporting bureaus must comply with the FCRA, and mortgage companies are no exception to the rule. They can be sued for an FCRA violation. Here, our credit report error lawyer explains the key things to know about your right to sue a mortgage company for a violation of the FCRA.
Mortgage Companies Must Comply With FCRA
Under the FCRA, all businesses that furnish information to credit agencies must ensure the accuracy of that data. To be clear, this includes mortgage companies—both the original lender and any loan servicer. Whether you took out your loan from a national bank or your loan is currently serviced by a third-party mortgage company, these firms are covered by the FCRA. Furnishers of credit data are required to report accurate information and to update or correct information if they discover errors. They must also respond to disputes in a timely, reasonable manner.
You Can Sue a Mortgage Lender or Servicer for an FCRA Violation
You can sue a mortgage company—including the loan originator or the loan servicer—if they violate your rights under the FCRA. Importantly, liability under the FCRA may apply to the company that initially issued your mortgage, any company that later acquired your loan, or a servicing company that manages your payments and account. Some common FCRA violations include:
- Reporting Inaccurate Information: A mortgage company may report that your loan is late, in default, or delinquent—even when your payments are current.
- Failing to Correct Errors: Once you file a dispute, the mortgage company is legally obligated to investigate and fix any verified mistakes.
- Continuing to Report Outdated Data after Loan Modification: Your credit report must reflect the current status of your mortgage, including discharges from bankruptcy or approved loan modifications.
- Failing to Conduct a Reasonable Investigation into a Dispute: The FCRA requires mortgage companies to thoroughly investigate disputes submitted through credit bureaus. If the investigation is rushed, superficial, or entirely overlooked, that could be a violation
Your Remedies for a Mortgage-Related Credit Report Error
If your mortgage lender or servicer violates the FCRA and causes harm—such as credit denial, higher interest rates, emotional distress, or other financial losses—you may be entitled to compensation. Remedies under the FCRA can include:
- Actual Damages: Actual damages, out-of-pocket losses, missed credit opportunities, and emotional distress caused by inaccurate credit reporting.
- Statutory Damages: If the violation was willful, you may recover between $100 and $1,000—even if you can’t prove actual damages.
- Attorneys’ Fees and Costs: If you prevail, the FCRA allows for the recovery of legal fees and court costs.
Contact Our Credit Report Error Attorney Today
At The Kim Law Firm, LLC, we are committed to protecting the rights and the interests of consumers. If you have any questions about suing a mortgage lender or mortgage service for a credit report error, we are here to help. Contact us today for a fully confidential, no obligation initial consultation. We have extensive experience handling FCRA cases.
Errors on your credit report?
The Kim Law Firm helps consumers with credit report errors under the FCRA and FDCPA. Get a free case review or call 855-996-6342 — you pay nothing unless we win.
Servicing transfers are where mortgage reporting breaks
Most homeowners never chose the company that services their loan, and many have been through several. A servicing transfer moves the payment history, the escrow balance and the account status from one system to another, and data does not always survive the move intact. Payments made during the transfer window get posted late or not at all, a loan modification is not carried over, a completed forbearance is reported as delinquency, and the new servicer then furnishes all of it to the bureaus as though it were the original record.
- Select Portfolio Servicing — a servicer that frequently receives transferred loans.
- Cenlar — performs subservicing for banks and credit unions.
- Dovenmuehle — services loans on behalf of lenders whose names borrowers know better.
- Fay Servicing — handles loans that have been through modification or default.
- Selene Finance — a servicer specializing in distressed and transferred portfolios.
- Planet Home Lending — services loans originated by other institutions.
Keep the goodbye letter from the old servicer and the welcome letter from the new one, since together they establish the transfer date and the balance each company claims. Compare your payment records against the history the new servicer reports for the months on either side of that date, which is where the discrepancy almost always sits. Dispute with the current furnisher in writing and include the canceled payments, because a mortgage delinquency is among the most damaging entries a credit file can carry and it will not correct itself as the loan moves again.