Using FCRA Claims Against Mortgage Servicers

The Fair Credit Reporting Act (FCRA) is a federal law that requires credit reporting agencies and information furnishers (including mortgage servicers) to ensure that the information they report is accurate. When a mortgage servicer reports inaccurate information about your loan to the credit bureaus — and fails to correct it after you dispute it — the FCRA gives you a private right of action. This means you can sue the servicer for damages. And these FCRA claims can be powerful leverage in a foreclosure defense.

Mortgage servicers frequently report inaccurate information to credit bureaus. Common errors include: reporting late payments during periods when you were current or in an approved forbearance plan, reporting the wrong loan balance, reporting a foreclosure that has been dismissed or withdrawn, continuing to report negative information after the loan has been modified, and failing to report that the account is disputed. A 2022 CFPB report found that mortgage servicers were among the most common subjects of credit reporting complaints. Each error may be a separate FCRA violation.

Before you can sue under the FCRA, you must follow the dispute process. First, obtain your credit reports from all three bureaus (Equifax, Experian, TransUnion). Identify the specific inaccurate information. File a written dispute with the credit bureau that is reporting the error, clearly identifying the inaccurate information and explaining why it's incorrect. The credit bureau must investigate — typically within 30 days — and must forward your dispute to the servicer that furnished the information. The servicer must then conduct its own investigation and correct any errors. If the servicer fails to correct the error after receiving notice of the dispute, you may have an FCRA claim.

FCRA claims provide several types of damages that can be pursued in foreclosure litigation. Actual damages include financial harm caused by the inaccurate reporting, such as denial of credit, higher interest rates, or inability to obtain housing. Statutory damages (for willful violations) range from $100 to $1,000 per violation. Punitive damages are available for willful violations. And attorney fees and costs are recoverable, meaning your FCRA claim can be pursued without out-of-pocket legal costs. These damages can offset any amounts you owe the lender or create a counterclaim that changes the settlement dynamic.

An FCRA counterclaim in a foreclosure case does more than add damages — it transforms the nature of the litigation. Now the lender is not just a plaintiff pursuing foreclosure; it's also a defendant facing federal statutory claims. This dual role changes the risk calculus for the lender. The cost of defending an FCRA claim may exceed the amount in controversy in the foreclosure. And if the FCRA violations are egregious, the lender may prefer to settle the entire case — including the foreclosure — rather than litigate the FCRA claim.

Our team can audit your mortgage servicer's credit reporting for FCRA compliance, identify specific errors, file disputes on your behalf, and pursue FCRA claims as counterclaims in your foreclosure case or as standalone actions. The FCRA is one of the most underused tools in foreclosure defense — and it can be one of the most effective.