Since the President declared the COVID-19 national emergency on March 13, 2020, Americans have faced unprecedented financial hardships. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, provided $2 trillion in economic relief. Along with that relief came new guidance for creditors. The purpose of this guidance is to keep consumers’ debts in check while they dealt with the pandemic.
Lots of accommodations
As a result of the CARES Act, many creditors have made accommodations for their debtors. They’ve waived late fees, extended due dates, and deferred payments. They’ve delayed foreclosures, repossessions, evictions, and service terminations. Those who made accommodations and furnish data to the major credit bureaus also changed how they report this data.
If you’re a data furnisher who’s made accommodations, you might be wondering how long this will last. You also might question how reporting will change when it’s over. In July, the Consumer Financial Protection Bureau (CFPB) issued post-accommodation guidelines that answer some, if not all, of your questions.
When will it end?
CARES Act credit accommodations won’t stay in effect indefinitely. The act only covers “any payment assistance or relief granted to a consumer who is affected by the COVID-19 pandemic during the period from January 31, 2020 until 120 days after the termination of the COVID-19 national emergency.”
However, the act was specific about the end of its Federal student loan accommodation, which suspended principal and interest payments through September 30, 2020. Of course, this date is subject to change based on the extent of the pandemic national emergency.
In addition to student loans, the CARES Act also required forbearance accommodations on Federally-backed mortgage loans. It did not require accommodations for any other type of debt, although it encouraged lenders to “work constructively with borrowers” until the 120-day post-pandemic date.
Preparing for post-accommodation reporting
Whether you’re providing accommodations to your customers until the pandemic ends or only during their particular financial hardship, you’ll need to know how your reporting will change when that accommodation period ends. According to TransUnion’s guidance, that accommodation ends when regularly scheduled payments resume. Paid-in-full accounts are the only exception.
You’ll also want to know what not to do, which the CFPB has clearly outlined:
“Assuming payments were not required or the consumer met any payment requirements of the accommodation, a furnisher cannot report a consumer that was reported as current pursuant to the CARES Act as delinquent based on the time period covered by the accommodation after the accommodation ends. A furnisher also cannot advance the delinquency of a consumer that was maintained pursuant to the CARES Act based on the time period covered by the accommodation after the accommodation ends.”
Metro 2® post-accommodation reporting guidelines
TransUnion’s Metro 2® Format COVID-19 CARES Act Post-Accommodation Reporting Guidance, published on July 16, 2020, outlines the reporting process in detail for data furnishers. The document covers:
- General post-accommodation reporting guidelines,
- Fannie Mae/Freddie Mac post-forbearance options, and
- Consumer reporting FAQs related to the act and the pandemic.
The general section offers direction for full accommodation repayment, short-term accommodation repayment, and payment accommodation deferral, as well.
However, if you have any questions about reporting any data to the major credit bureaus, give us a call. Our mission is to help companies report credit data to the bureaus accurately and on time. Let us know how we can help you.
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