Opinion ID: 758680
Heading Depth: 2
Heading Rank: 1

Heading: The Prior Foreclosure and the New Purchase

Text: 4 In 1984, Edward and Sheree Sepulvado purchased a home. In the summer of 1988, the Sepulvados were unable to make timely payments. In July 1988, the mortgage lender, the now-defunct University Savings, foreclosed on the home. University Savings sold the home for less than was owed by the Sepulvados, which created a deficiency on their account of $12,333. Sometime around June 1989, University Savings reported the foreclosure to certain credit reporting agencies, including the defendant CSC. University Savings did not report any deficiency at that time. 1 In July 1989, University Savings notified the Sepulvados that they were responsible for the $12,333 deficiency and attempted collection by a form letter dated July 21, 1989. The Sepulvados never paid the deficiency, and University Savings did not reduce the obligation to judgment by commencing legal action. 5 Under the provisions of the Fair Credit Reporting Act, the Sepulvados foreclosure and the resulting deficiency could have been reported on their credit for a period of seven years. See 15 U.S.C. § 1681c(a). The Sepulvados knew this, and for more than six years lived in rental property while waiting for the foreclosure to drop off of their credit report. Then in March 1995, approximately six years and eight months after the foreclosure, the Sepulvados signed an earnest money contract to purchase a new home. The Sepulvados were referred by the builder to Texas Homestead to finance that purchase.