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Bureau of Consumer Financial Protection.
Enforcement compliance bulletin and policy guidance.
The Bureau of Consumer Financial Protection (Bureau) is issuing this Enforcement compliance bulletin and policy guidance (Bulletin) regarding consumer reporting of rental information in light of upcoming heightened risks to renters associated with inaccurate consumer reporting information. As pandemic-related government interventions aimed at protecting renters begin to expire over the coming months, the Bureau will be paying particular attention to consumer reporting agencies' (CRAs') and furnishers' compliance with their accuracy and dispute obligations under the Fair Credit Reporting Act (FCRA) and Regulation V with respect to rental information. The Bureau will hold CRAs and furnishers accountable for failing to comply with the FCRA and Regulation V. The economic recovery of renters and their ability to secure new rental housing should not be impeded by noncompliance with the law.
This bulletin is applicable on July 7, 2021.
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FOR FURTHER INFORMATION CONTACT:
Susan Stocks, Assistant Deputy Enforcement Director for Policy and Strategy, Office of Enforcement; Amanda Quester, Pavneet Singh, Laura Stack, or Priscilla Walton-Fein, Senior Counsels, Office of Regulations, at 202-435-7700. If you require this document in an alternative electronic format, please contact CFPB_Accessibility@cfpb.gov.
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Rental information in consumer reports plays a critical role in consumers' access to rental housing, credit, and other opportunities.
As the eviction moratoria and other government interventions aimed at alleviating the economic and public health impacts of the 2019 novel coronavirus (COVID-19) pandemic begin to expire, the Bureau anticipates that many renters will face eviction from their homes, rental arrearages, and collection attempts to recover unpaid rent.
Consumers have complained to the Bureau about the financial impacts of the pandemic on their ability to stay current on rental payments and about negative rental information related to the pandemic in consumer reports.
An increase in negative rental information in the consumer reporting system, combined with an increase in the number of consumers seeking rental housing, may create new risks that inaccurate negative rental information will be included in tenant-screening reports and that such inaccuracies will affect increased numbers of consumers. Inaccurate rental information in tenant-screening reports can have devastating impacts on consumers, including impairing the ability of renters negatively impacted by the pandemic to secure new rental housing and otherwise recover from the pandemic's economic effects. An increase in housing instability caused by inaccurate rental information could undermine the nation's efforts to recover from the pandemic.
On January 31, 2020, the Department of Health and Human Services declared a public health emergency for the entire United States to aid the nation's healthcare community in responding to the COVID-19 pandemic.
On March 13, 2020, then-President Trump declared a national emergency concerning the COVID-19 pandemic, citing the strain on the healthcare system and the need for additional measures to contain and combat the spread of COVID-19.
Income shocks resulting from the pandemic, such as a job loss, reduced work hours, or the death or illness of a family member, contributed to an increase in housing and financial insecurity for many households.
The financial impact of the pandemic was especially pronounced for renters.
Survey data indicate that about half of all renters saw their incomes fall during the pandemic due to lost employment or reductions in hours worked.
In August 2020, some estimates projected that up to 30 to 40 million individuals in 13 to 17 million renter households were at risk of eviction over the course of the Start Printed Page 35596pandemic.
In comparison, approximately 900,000 renter households are evicted in a typical year.
On September 4, 2020, the Centers for Disease Control and Prevention (CDC) published an agency order entitled “Temporary Halt in Residential Evictions To Prevent the Further Spread of COVID-19” (CDC Order).
Citing the historic threat to public health posed by the COVID-19 pandemic, the CDC Order established an eviction moratorium that generally limits the circumstances in which certain persons may be evicted from residential property.
The CDC Order initially was set to expire on December 31, 2020.
The CDC Order has been extended four times and currently is set to expire on July 31, 2021.
In addition to the CDC's eviction moratorium, Federal, State, and local governments have taken a variety of other actions to alleviate the rental housing-related impacts of the COVID-19 pandemic, including establishing other eviction moratoria and rental assistance programs. For instance, section 4024 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) 
provided a temporary moratorium on eviction filings 
as well as other protections for tenants in certain rental properties with Federal assistance or federally related financing.
In addition, as discussed in more detail below, the Federal Emergency Rental Assistance (ERA) programs established by the U.S. Department of the Treasury (Treasury) have made billions of dollars available to eligible households by funding rental assistance programs administered by State and local governments.
State and local governments have also implemented temporary eviction moratoria, rent freezes, and additional rental assistance programs.
These governmental actions have reduced evictions so far.
However, the Bureau is aware of concerns that some landlords may have evicted tenants in violation of applicable eviction moratoria and that other tenants may have preemptively moved out of rental housing to avoid an eviction filing or been subject to other types of informal evictions outside the judicial eviction process.
The Bureau's analysis of recent consumer complaints indicates that renters have expressed concerns about debt collection activities following evictions, including attempts to collect questionable charges and fees.
These reports and complaints are an area of concern for the Bureau, and Bureau staff will be monitoring and investigating eviction practices to ensure that they are complying with the law. Evicting tenants in violation of the CDC Order, State, or local moratoria, or evicting or threatening to evict them without apprising them of their legal rights under such moratoria, may violate prohibitions against deceptive and unfair practices under the Fair Debt Collection Practices Act and the Federal Trade Commission Act.
Moreover, as the CDC Order and other measures begin to expire, many households will face difficulties navigating significant rental payment arrearages.
Low-income and minority renters have been disproportionately affected by the economic effects of the COVID-19 pandemic, including job losses.
Although economic conditions have improved in recent months,
13 percent of adult renters were behind on rent in May 2021.
Renters in low-income households were more likely to report they were behind on rental payments than those in higher-income households. As of May 2021, more than one in six renters with household incomes under $25,000 reported that they were behind on their rent.
An estimated 19 percent of renters with children report being not caught up on rent, compared to 10 percent not living with anyone under 18.
Minority renters were more likely to report that their household was not caught up on rent: 21 percent of Black renters, 17 percent of Hispanic renters, and 17 percent of Asian renters said they were not caught up on rent, compared to 9 percent of white renters.
Accordingly, Start Printed Page 35597low-income and minority renters are more likely to be affected by the expiration of the CDC's eviction moratorium and other temporary measures aimed at reducing evictions and supporting renters unable to make their rental payments.
The Federal ERA programs were established to address the concerns about rental arrearages.
ERA funds may be used to provide assistance to eligible households and their landlords to pay rent, utilities, and certain other housing costs, including arrearages for rent and utility payments.
Grantees of ERA funds have been working to ramp up their deployment of funds.
As the CDC has noted, though there are indications that emergency rental assistance has started to reach increasing numbers of households over recent months, there are likely hundreds of thousands of applications for assistance that currently remain outstanding as programs accelerate their activity.
The Bureau is concerned that renters may be evicted for nonpayment of rent even as they are attempting to access these funds. The Bureau encourages landlords and renters to consider their options under these programs. In addition to the extensive information about rental assistance programs under the ERA available on Treasury's website,
information about rental assistance programs under the ERA is also available on the Bureau's website.
The Bureau anticipates that many tenants who face eviction or have experienced economic shocks during the pandemic will seek alternative housing in the rental market. In addition to current renters seeking new housing, the Bureau also anticipates a likely rise in consumers who are currently homeowners seeking rental housing as pandemic-related mortgage forbearance programs and foreclosure moratoria come to an end.
The Bureau is concerned that information concerning evictions and rental payment arrearages related to the pandemic's effects may not be a reliable predictor of a consumer's future performance given the extent of the economic dislocation caused by the pandemic. The use of pre-pandemic relationships and scoring models on pandemic data may lead to unreliable conclusions regarding a consumer's future performance and may hinder public policy efforts to protect consumers during the pandemic and promote an equitable recovery from the pandemic. Some States and local governments have taken steps to prevent the reporting or use of information related to evictions and rental arrearages arising during the pandemic.
For example, some States have taken or are considering taking steps to make it easier to seal or expunge eviction records.
In the upcoming transition period during which the Bureau anticipates both an increase in negative rental information in the consumer reporting system and an increase in consumers seeking rental housing, the Bureau is concerned that existing problems with the accuracy of tenant-screening and other consumer reports will be exacerbated. According to a 2019 report by the National Consumer Law Center (NCLC), the vast majority of landlords use tenant-screening reports to screen rental-housing applicants.
These reports, which are obtained from one of the nation's many tenant-screening companies,
may include traditional credit report data, criminal background history, and rental information. Inaccuracies in negative rental information included in consumer reports can have significant damaging consequences for tenants' future access to rental housing, credit, and other opportunities. For example, an applicant whose tenant-screening report shows past litigation or a poor rental payment history may find it difficult or more expensive to rent property, and many landlords will not rent to an applicant if their screening report shows Start Printed Page 35598an eviction filing.
Concerns about lack of access to rental housing are further heightened during the continuing pandemic. For example, a basis for the CDC's eviction moratorium is the concern that individuals moving into close quarters in congregate or shared living settings, such as homeless shelters, puts individuals at higher risk of contracting COVID-19.
CRAs and debt collectors and landlords that furnish information for inclusion in consumer reports have important obligations under the FCRA and Regulation V relating to the accuracy of information included in consumer reports,
and the Bureau urges CRAs and furnishers to ensure they are complying with these obligations.
Concerns about the accuracy of information included in consumer reports are long-standing,
and the Bureau is especially concerned about the effects of these accuracy problems in light of the economic and public health impacts of COVID-19. The Bureau has received consumer complaints alleging that inaccuracies in tenant-screening reports have caused landlords to deny some consumers rental housing and charge others higher security deposits than they would have otherwise.
The Bureau is particularly concerned that the procedures that some tenant-screening companies use to match public records and other rental information to specific consumers may create a high risk that inaccurate data will be included in tenant-screening reports,
a risk that may be further heightened by increased volumes of negative rental information resulting from the pandemic. The risk of mismatching may be greater among Hispanic, Black, and Asian individuals because there is less surname diversity than among the white population.
In addition, the Bureau is concerned that tenant-screening companies may report information, such as information about an eviction filing, in a consumer report without having reasonable procedures to report information about the disposition of the eviction filing or to prevent the inclusion of multiple entries for the same eviction action in the same consumer report.
The Bureau is also concerned that tenant-screening companies may lack reasonable procedures to exclude from consumer reports eviction information that has been sealed or expunged.
CRAs frequently include rental information, such as eviction records, that comes from public records; landlords and debt collectors also furnish information about rental housing payments and debts to CRAs. The FCRA and Regulation V set forth important requirements for furnishers concerning both the accuracy of information furnished and the handling of consumer disputes related to the accuracy of information included in consumer reports.
The Bureau is concerned that existing accuracy problems related to the furnishing of rental information may be exacerbated by the anticipated increase in the amount of negative rental information furnished.
For example, furnishers may fail to account for COVID-19-related aid or protections when reporting overdue rent amounts. In addition to providing a temporary moratorium on eviction filings for tenants in certain rental properties with Federal assistance or federally related financing, the CARES Act prohibited landlords of these rental properties from charging fees, penalties, or other charges related to the nonpayment of rent during the Act's eviction moratorium.
State and local laws may also in some cases prohibit landlords from charging certain late fees or penalties to renters. The Bureau is concerned that furnishers may include prohibited penalties or fees when reporting rental arrearages. In addition, under many rental assistance programs, funds to make rental payments may be provided to landlords to pay the rent of specific tenants who are eligible for the program. If furnishers providing rental information do not appropriately account for funds received pursuant to these programs and fail to offset overdue rent amounts, this could lead to inaccuracies in consumer reports.
Finally, the dispute-resolution obligations the FCRA and Regulation V impose on CRAs and furnishers are also critical to ensuring that consumer reports are accurate. CRAs and furnishers must conduct reasonable and timely investigations of consumer disputes to verify the accuracy of the information furnished.
An increase in the amount of negative rental information in public records and furnished to CRAs is likely to lead to a corresponding increase in dispute volumes. A reasonable and timely investigation of a consumer dispute is critical to mitigating the harmful impact that inaccurate negative information in a consumer report may have on the Start Printed Page 35599consumer. Moreover, proper handling of disputes not only ensures that inaccuracies in the disputing consumer's report are resolved, it also facilitates CRA and furnisher identification of systemic problems related to their consumer reporting and furnishing practices.
II. Compliance Guidance
As pandemic-related government interventions aimed at protecting renters begin to expire, the Bureau will continue to look carefully at consumer reporting agencies' and furnishers' compliance with their FCRA accuracy obligations with respect to rental information. CRAs and furnishers should take immediate steps to ensure they are fulfilling their obligations under the law. If the Bureau determines that a CRA or furnisher has engaged in any acts or practices that violate the FCRA, Regulation V, or other Federal consumer financial laws, the Bureau will take appropriate enforcement action to address violations and seek all appropriate corrective measures, including remediation of harm to consumers.
The Bureau plans to pay particular attention to the areas outlined below.
For CRAs Reporting Rental Information
1. Whether CRAs are reporting accurate rental information.
2. Whether CRAs are using a sufficient number of identifiers to match consumer report information to the consumer who is the subject of the report, including whether CRAs are using name-matching procedures or limited identifiers likely to heighten the risk of inaccurate matching.
3. Whether CRAs are reporting eviction information that is inaccurate, incomplete, or misleading (such as may result from a failure to have reasonable procedures to report information about the disposition of an eviction filing, to prevent the inclusion of multiple entries for the same eviction action in the same consumer report, or to prevent the inclusion of eviction information that has been sealed or expunged).
4. Whether CRAs are complying with their obligations to investigate disputed information in a consumer report, including whether they are conducting timely and reasonable investigations.
For Furnishers Providing Rental Information
1. Whether furnishers are providing accurate rental information to CRAs.
2. Whether furnishers are providing information about rental arrearages that include amounts that were already paid on behalf of a tenant through a government grant or relief program, such as the Emergency Rental Assistance programs.
3. Whether furnishers are providing information about rental arrearages that include fees or penalties that CARES Act section 4024(b) or other laws prohibit charging.
4. Whether furnishers are complying with their obligations to investigate disputed information in a consumer report, including whether they are conducting timely and reasonable investigations.
The Bureau issues this Bulletin to highlight that the Bureau will hold CRAs and furnishers accountable if they do not comply with their accuracy and dispute obligations under the FCRA and Regulation V with respect to rental information.
IV. Regulatory Requirements
This Bulletin constitutes a general statement of policy exempt from the notice and comment rulemaking requirements of the Administrative Procedure Act.
It summarizes existing legal requirements and articulates considerations relevant to the Bureau's exercise of its enforcement discretion for institutions under its jurisdiction. It does not impose any legal requirements on external parties, nor does it create or confer any substantive rights on external parties that could be enforceable in any administrative or civil proceeding. Because no notice of proposed rulemaking is required in issuing this Bulletin, the Regulatory Flexibility Act also does not require an initial or final regulatory flexibility analysis.
The Bureau has also determined that the issuance of this Bulletin does not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring approval by the Office of Management and Budget under the Paperwork Reduction Act of 1995.
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Dated: July 1, 2021.
Acting Director, Bureau of Consumer Financial Protection.
[FR Doc. 2021-14459 Filed 7-6-21; 8:45 am]
BILLING CODE 4810-AM-P