On February 26, the Northern District of California held in Banneck v. Federal National Mortgage Association that the defendant, commonly referred to as “Fannie Mae,” was not a consumer reporting agency, or “CRA,” as defined in the Fair Credit Reporting Act, granting summary judgment in a putative nationwide class action. The lawsuit had alleged violations of the FCRA and California Consumer Reporting Agencies Act (“CCRAA”).
The FCRA defines a CRA as (1) “any person which … regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers” and (2) “for the purpose of furnishing consumer reports to third parties.” The CCRAA contains a virtually identical definition.
In finding that Fannie Mae is not a CRA, the Court relied on binding precedent from the Ninth Circuit. In Zabriskie v. Federal National Mortgage Association, the Ninth Circuit held that Fannie Mae met neither prong of the FCRA’s definition of a CRA. The Ninth Circuit first held that Fannie Mae did not assemble or evaluate consumer credit information, but rather offered tools to mortgage lenders so that they could evaluate mortgage loan applicants. The Zabriskie Court also found that Fannie Mae did not assemble or evaluate consumer credit information for the purpose of furnishing consumer reports to third parties, but instead it assembled such information only “to determine a loan’s eligibility for subsequent purchase.”
In ruling that Fannie Mae was not a CRA, the Court determined that Banneck’s FCRA and CCRAA claims necessarily failed. The Court also brushed aside Banneck’s attempts to distinguish Zabriskie on procedural grounds, finding that the applicable summary judgment standard did not substantively change the analysis from that of Zabriskie and that the pending petition for rehearing en banc in Zabriskie did not eliminate its binding authority.
Troutman Sanders will continue to monitor and report on developments in FCRA actions and related litigation.