Mortgages Analyzed
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Notice of Furnishing Negative Information

What is Notice of Furnishing Negative Information?

Notice of Furnishing Negative Information

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.

Source :www.MortgagesAnalyzed.com

Contents of Notice of Furnishing Negative Information

The notice typically contains the following:

  1. Loan Information: The notice contains information such as date, loan number, borrower’s names, property address, and lender’s name and address.
  2. Notice Required by Reg V: The notice required by Regulation V – "We may report information about your account to credit bureaus. Late payments, missed payments, or other defaults on your account may be reflected in your credit report."
  3. Signature: The borrower’s signature signifies the receipt of notice by the borrower.
Source :www.MortgagesAnalyzed.com
 

Borrower's Considerations

Informational Purpose Only

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.

Source :www.MortgagesAnalyzed.com

Lender's Considerations

Timing

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.

Format

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:

  1. Rearranging the order of the references to "late payment(s)", or "missed payment(s)."
  2. Pluralizing the terms "credit bureau", "credit report", and "account."
  3. Specifying the particular type of account on which information may be furnished, such as "credit card account."
  4. Rearranging in Model Notice B-1 the phrases "information about your account" and "to credit bureaus" such that it would read "We may report to credit bureaus information about your account."

Even though the regulation allows some flexibility, it is best to simply use the model language without making changes.

Recordkeeping

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.

Data Fields

No new data element/information is developed or captured through the use of this notice.

Source :www.MortgagesAnalyzed.com
 

Document Summary

 
Notice of Furnishing Negative Information
Purpose
The disclosure informs the borrower that the lender will be reporting the account information, including payments, late payments, missed payments, and defaults to the credit reporting agencies.
Use in Mortgages
The disclosure is used for informational purposes and provided by lender to meet the requirements of FACTA and Regulation V.
Common Names
Notice of Furnishing Negative Information
Type
Disclosure
Provided By
Lender
Provided To
Borrower
Notarization Required
No
Signed By
By borrower(s) to acknowledge receipt
Life Cycle Stage
Origination
Recordkeeping
Recommend maintaining evidence of providing notice for as long as the loan is outstanding
Model Form
Model Notice B-1, CFPB Regulation V, Appendix B to Part 1022 - Model Notices of Furnishing Negative Information
Applicable Laws
CFPB Regulation V (12 CFR 1022), FACTA section 217
Source :www.MortgagesAnalyzed.com

Updated: Jan 11, 2017

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