CA1: First sides with credit reporting agencies where valid loan was secured by forged mortgage

DeAndrade v. Trans Union LLC, No. 07-1844.  This is a credit-reporting screw-up case (in which the defendants are accused under the Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681x ("FCRA") of not “reinvestigat[ing] properly and delete the disputed debt from DeAndrade's credit report.”  What is startling about this is that the plaintiffs claim that their signatures had been forged on a mortgage placed on their home that was obtained to secure the purchase of some new windows.

When the underlying lawsuit (involving the forged signatures) was commenced, the plaintiffs started paying the undisputed debt into escrow and informed the credit-reporting agencies.  The credit reporting companies “investigated” and found against the plaintiffs.  So, the plaintiffs sued.  The credit reporting companies argued that this was really a collateral attack on the loan.

The First looks at the difference between and § 1681e(b) claim and a 15 U.S.C. § 1681i(a) (reasonable investigation) claim.  The First concludes that the “plaintiff must also adduce sufficient evidence to show that the disputed information was in fact inaccurate.”  In this case, the court concluded that the underlying loan was “ratified” even if the validity of the mortgage is being attacked and “This is not a factual inaccuracy that could have been uncovered by a reasonable reinvestigation”

Debt Law Network comments here.

For an example of the Ninth going the other way, see here.