Notice of Furnishing Negative Information disclosure is provided by the lender to inform the borrower that it may report information about the mortgage loan account to the credit reporting agencies.
The purpose of the disclosure is to inform the borrower that the lender will be reporting the account information, including payments, late payments, missed payments, and defaults to the credit reporting agencies. The disclosure is usually included in the closing documents that are signed at loan closing. The lender may require the borrower to sign the disclosure to evidence the delivery of the disclosure.
By providing the notice the lender meets the requirements of section 217 of Fair and Accurate Credit Transactions Act (FACTA) of 2003. FACTA is an amendment to Fair Credit Reporting Act (FCRA), which is implemented by CFPB Regulation V.
The notice typically contains the following:
The notice informs you that the lender will report your account information to credit reporting agencies. Therefore, the loan performance will show on the credit report, such as payments, balance, late payments, and defaults.
The notice is typically provided at the time of loan closing. The borrower(s) are asked to sign the disclosure which acts as an acknowledgement of receipt of Notice of Furnishing Negative Information.
Appendix B to CFPB Regulation V includes the instructions and model language that you can use to meet the regulatory requirements. It is listed as Model Notice B-1, Appendix B to Part 1022 - Model Notices of Furnishing Negative Information.
CFPB Regulation V gives you the flexibility to make certain changes to the language or format of the model notices without losing the safe harbor from liability provided by the model notices. The changes you make to the model notices should not affect the substance, clarity, or meaningful sequence of the language in the model notices. Regulation V provides a few examples of changes that you can make:
Even though the regulation allows some flexibility, it is best to simply use the model language without making changes.
The regulation does not require a specific time period for maintain the disclosure in the loan file. For audit and legal purposes, you may want to maintain evidence of providing notice for as long as the loan is outstanding.
No new data element/information is developed or captured through the use of this notice.
Updated: Jan 11, 2017