Opinion ID: 758680
Heading Depth: 2
Heading Rank: 3

Heading: The Negative Credit Report

Text: 7 On or about March 13, 1995, Texas Homestead obtained a credit report on the Sepulvados from Advanced Credit Technology (ACT). The report contained an entry that was ultimately determined to be related to the deficiency created by the 1988 University Savings foreclosure. On its face, however, the ACT entry indicated that Mr. Sepulvado owed $12,333 on an account with an open date of March 1994, and that no payments had ever been made. 8 ACT retrieved the information made the basis of that entry from a database maintained and provided by Equifax. Equifax is an affiliate of the defendant, CSC. 3 ACT made certain material changes to the CSC entry before sending its own report to Texas Homestead. For example, whereas the ACT entry reported an open date of March 1994, the CSC entry reported that an obligation in the amount of $12,333 had been assigned to CSC/TCCP in March 1994. 4 At trial, ACT President James Fuchs confirmed that the information ACT retrieved from credit repositories was often reformatted before the issuance of an ACT report. 9 When Texas Homestead received the ACT report, Ms. Jamison read the described entry to reflect that the Sepulvados had taken out a $12,333 loan in March 1994, and then immediately defaulted without making any payments. Ms. Jamison informed Mrs. Sepulvado that the mortgage would not be approved as long as the outstanding account remained on the credit report. Testimony from both Ms. Jamison and a mortgage banker produced by the defense established that mortgage lenders will not approve a mortgage when there is a collection item reported on the credit report. In making that decision, industry practice requires that the mortgage lender be guided primarily by information on the face of the credit report, rather than by any explanatory statements that might be provided by the applicant. Accordingly, Ms. Jamison further informed Mrs. Sepulvado that neither Texas Homestead nor Ms. Jamison herself could assist the Sepulvados with regard to removing the negative entry. Rather, Ms. Jamison encouraged the Sepulvados to contact the creditor and the credit reporting agency to determine whether the entry was being erroneously reported. 10 Near the same time, ACT also sent the Sepulvados a letter informing them that adverse credit history had been reported to Texas Homestead. The letter contained a version of the ACT entry which showed an outstanding collection item in the amount of $12,333. Although the letter reported that Texas Homestead had requested additional information about the item, the undisputed testimony at trial, from both the President of ACT and Ms. Jamison, was that Texas Homestead never instigated any request for information from ACT. 11