short sales

Shaw v. Experian - 9th Circuit Oral Argument

Here is a link to our recent oral argument in the Shaw v. Experian class action:

Shaw Oral Argument

The Shaw case concerns the accuracy of Experian's reporting of short sales. Following the great recession, there was a dramatic increase in short sales. To help consumers, the nation’s largest mortgage underwriters created a new, 2- year waiting period for consumers who want to re-enter the conventional mortgage market after completing a short sale. This rule contrasts sharply with the 7-year waiting period applicable to foreclosures and makes it imperative that consumer reports identify short sales with maximum possible accuracy. Experian’s consumer reports fail that standard because they can, at best, only imply a possible short sale while simultaneously implying other events, including a possible foreclosure.

While Experian now insists it accurately and precisely reports short sales, that is not what it told Fannie Mae in May 2010. At that time, when Fannie Mae asked how it could identify short sales in Experian’s data, Experian admitted:

There are no specific codes that will specifically identify a Short Sale condition. The data reporting guidelines instruct the client to report the account as Settled-Special Comment AU. So the presence of this comment on a Mortgage loan ‘could’ imply short sale.

This single piece of evidence undermines Experian’s current contention that any particular set of codes can be relied on to identify short sales with the precision and certainty demanded by the mortgage industry. Experian expressly told Fannie Mae that is not true. And, the record shows the reason it is not true is because Experian requires furnishers to report short sales using the exact same codes they use to report other events that are not short sales. Accordingly, Experian’s data is inherently vague, imprecise and uncertain.

Experian materially compounds this uncertainty by displaying an ambiguous, catchall code 9 in the payment history grid of its consumer reports. The code 9 is not reported by furnishers and can infer numerous derogatory events, including a potential foreclosure. Experian’s reports therefore portray inconsistent and conflicting information that caused the rejection of new mortgage applications for scores of consumers, including Plaintiffs. Experian’s reports are inaccurate because they are so imprecise, incomplete, misleading and unreliable they are not only expected to, but did in fact, adversely affect credit decisions.