Class Action Says LoanCare Supplied False Data to Credit Reporting Agencies, Threatened Plaintiff with Foreclosure

New to ClassAction.org? Read our Newswire Disclaimer

A proposed class action filed by a New York homeowner claims LoanCare, LLC “willfully” furnished credit reporting agencies with false information about him and improperly threatened him with foreclosure over outstanding mortgage payments accrued during the COVID-19 pandemic.

Want to stay in the loop on class actions that matter to you? Sign up for ClassAction.org’s free weekly newsletter here.

The 10-page lawsuit says the financial services company violated the federal Fair Credit Reporting Act by misleadingly representing to credit reporting agencies that the plaintiff’s mortgage payments were late, even though, in truth, the defendant had repeatedly refused to accept the man’s monthly payments. The suit relays that LoanCare instead continually demanded that the plaintiff pay the full outstanding amount—a total of $19,882.32—that had accrued while his mortgage was placed into forbearance due to COVID-19.

According to the case, the plaintiff entered into a COVID forbearance plan with a third-party mortgage lending company in March 2021, which was set to expire on March 1, 2022. A month before the man’s plan expired, LoanCare obtained the servicing rights to his mortgage, the complaint says.

“[E]ager to make profits at the expense of [the plaintiff],” LoanCare sent a “formal notice” to the man just days before his forbearance was set to expire, falsely representing that he had defaulted on his payments, the filing claims.

Following this “false threat,” the company indicated that the man must pay the full “default” amount that had accrued while his mortgage was in forbearance in one lump sum, or else he would be subject to “further legal action, potential foreclosure, and negative credit reporting,” the lawsuit explains.

The suit argues that LoanCare’s demand opposed federal guidelines put in place to protect homeowners from the impact of the pandemic. Per the case, the Consumer Financial Protection Bureau (CFPB) had clearly stipulated in regulatory guidance issued throughout the pandemic that once a homeowner’s forbearance period ended, the individual would not be required to pay the full amount at once but would instead be allowed to make payments over time.

The complaint charges, however, that LoanCare “paid no regard to the CFPB but was more interested in lining its pockets with full payments from consumers.”

As the filing tells it, after receiving the letter from the company, the plaintiff repeatedly attempted to make regular monthly mortgage payments, but LoanCare purportedly refused to accept anything other than the full amount, which was increasing each month.

In addition, LoanCare began declaring to credit reporting agencies that the plaintiff was 180 days late on his payments and denied the man’s attempts to enter any sort of payment plan, further ensuring that the company could “charge more and more fees,” the suit contends.

Though the plaintiff challenged the information with the credit reporting agencies, the organizations handed the dispute over to LoanCare, which simply “continued its practices of putting pressure on [the plaintiff] for the full outstanding amount that had accrued while in forbearance,” the case states.

The lawsuit looks to represent anyone in the United States who was subject to the same tactics wherein LoanCare sought to recover the entire remaining debt balance in a lump sum payment after the consumer exited a forbearance arrangement.

Get class action lawsuit news sent to your inbox – sign up for ClassAction.org’s free weekly newsletter here.