In 2009, Debtor filed a Chapter 13 petition and listed Bank of America on Schedule D. The Debtor later converted her case to one under Chapter 7. In 2013, the Debtor was granted a Discharge; also that year, Bank of America transferred its servicing rights to Nationstar Mortgage LLC (Defendant). About two weeks later, the Court entered an order approving the sale of the Debtor’s home free of all liens and encumbrances, including the mortgage which Nationstar serviced.
The Defendant, as servicer, obtained the Debtor’s consumer credit report for account review 6 times in the next 20 months. On each occasion, the lien still attached to the Debtor’s property and a balance still existed on the mortgage account.
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Nationstar, in the regular course of business, performs “soft pulls” of consumer reports for its mortgage accounts for a variety of account maintenance reasons. A soft pull does not provide individual account or tradeline information found on a full consumer report obtained for a “hard pull” for the extension of credit. The soft pull helps the mortgage servicer determine the consumer’s status and predict the consumer’s future behavior. Nationstar regularly, usually quarterly, pulls consumer information for account review and servicing reasons.
The Debtor filed the present complaint asserting a single claim under the Fair Credit Reporting Act (“FCRA”): that Nationstar’s account review inquiries, or “soft pulls” lacked any permissible purpose after the bankruptcy discharge. See 15 U.S.C. § 1681b(f). After discovery, Defendant filed the present motion for summary judgment asserting that as a matter of law, Plaintiff could not show that Defendant’s actions were “willful.”
The Court started with an analysis of what a “willful” or “reckless” violation the FCRA required. It found that a Plaintiff must show “that the Defendant ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless.”
In the present case, the Court said that, after discharge, the consumer is no longer indebted on the loan, but is indebted to the extent of the collateral, the former home. See 11 U.S.C. § 726-27. Plaintiff asserts that Nationstar’s soft pulls were not permissible, under § 1681b(a)(3)(A) because “there was no credit transaction,” and therefore “ . . . review . . . of an account …” cannot be used to justify the pull. However, the mortgage loan and particularly, the continuing lien, is the credit transaction for which an in rem obligation exists, even after discharge. See Johnson v. Home State Bank, 501 U.S. 78, 84 (1991).
The Court noted that the surviving mortgage interest corresponds to an enforceable obligation of the debtor.” Id. Thus, rather than create a limitation on access to Plaintiff’s credit information, post-discharge, § 1681b(a)(3) provides broad discretion for Nationstar’s access to “soft pull” information for “review or collection of an account” or any other “legitimate business need.”
The Court granted Nationstar’s Motion for Summary Judgment.