Ninth Circuit Rules Fannie Mae Not Liable Under FCRA

The Ninth Circuit Court of Appeals recently recently ruled that Fannie Mae was not liable for false information contained in its Desktop Underwriter software.  As a result:

The 9th U.S. Circuit Court of Appeals reversed a $30,000 verdict and an award of $720,000 in attorneys’ fees and costs to Richard and Kristin Zabriskie, an Arizona couple whose refinancing plans were thwarted for 15 months because Fannie Mae’s proprietary software for lenders erroneously reported that they had a foreclosure on their record.

The dissent points out:

…There was no uniformity in the industry on how these Codes were used, however, and Fannie Mae knew this. It also knew that there was no Code for a short sale. Despite the lack of uniformity and the lack of a short sale code, Fannie Mae programmed DU so that an MOP Code 9 would always be interpreted as a “collection or charge-off” and would trigger a message stating that DU had identified a foreclosure or a deed-in-lieu of one.

and:

This Court has observed that, “given the ubiquity and importance of consumer reports in modern life—in employment decisions, in loan applications, in home purchases, and much more—the real-world implications of material inaccuracies in [the] reports seem patent on their face.” Robins, 867 F.3d at 1114. To hold that Fannie Mae is not a consumer reporting agency is to deny consumers any sort of recourse from these grave and consequential errors.