RESPA applies to a “federally related mortgage loan,” which is defined as:
The term “federally related mortgage loan” includes any loan (other than temporary financing such as a construction loan) which is secured by a first or subordinate lien on residential real property (including individual units of condominiums and cooperatives) designed principally for the occupancy of from one to four families, including any such secured loan, the proceeds of which are used to prepay or pay off an existing loan secured by the same property; and is made in whole or in part by any lender the deposits or accounts of which are insured by any agency of the Federal Government, or is made in whole or in part by any lender which is regulated by any agency of the Federal Government, or is made in whole or in part, or insured, guaranteed, supplemented, or assisted in any way, by the Secretary or any other officer or agency of the Federal Government or under or in connection with a housing or urban development program administered by the Secretary or a housing or related program administered by any other such officer or agency; or is intended to be sold by the originating lender to the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, or a financial institution from which it is to be purchased by the Federal Home Loan Mortgage Corporation; or is made in whole or in part by any “creditor”, as defined in 15 U.S.C.A. § 1602(f) who makes or invests in residential real estate loans aggregating more than $1,000,000 per year, except that for the purpose of this chapter, the term “creditor” does not include any agency or instrumentality of any State.
QUALIFIED WRITTEN REQUEST UNDER 12 U.S.C. 2605 et seq. (RESPA – QWR)
A. THE LAW: 12 U.S.C. § 2605 STATES:
(1) Qualified written request:
For purposes of this subsection, a qualified written request shall be a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that includes, or otherwise enables the servicer to identify, the name and account of the borrower; and includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower. (RESPA therefore provides the explicit statutory right for a borrower to request “other information” as deemed necessary to the borrower).
NOTE: This Section makes clear that a Borrower may request “other information” (with no limits placed on what constitutes “other information”). Therefore, please do not state that this request “goes beyond that which is permitted by RESPA.” RESPA places no statutory limitations on the information which can be requested. A loan servicer is not therefore entitled to ignore this provision merely because of any perceived inconvenience in responding.
B. LEGALLY MANDATED LOAN SERVICER ACTIONS REQUIRED (LOAN SERVICER DUTY):
(1) Action with respect to inquiry:
Not later than 60 days (excluding legal public holidays, Saturdays, and Sundays) after the receipt from any borrower of any qualified written request under paragraph (1) and, if applicable, before taking any action with respect to the inquiry of the borrower, the servicer shall make appropriate corrections in the account of the borrower, including the crediting of any late charges or penalties, and transmit to the borrower a written notification of such correction (which shall include the name and telephone number of a representative of the servicer who can provide assistance to the borrower);
After conducting an investigation, provide the borrower with a written explanation or clarification that includes to the extent applicable, a statement of the reasons for which the servicer believes the account of the borrower is correct as determined by the servicer; and the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower; or after conducting an investigation, provide the borrower with a written explanation or clarification that includes information requested by the borrower or an explanation of why the information requested is unavailable or cannot be obtained by the servicer; and the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower.
NOTE: This makes clear that 2605 requires the lender or loan servicer to take action includling providing information requested by the borrower, conducting an investigation of the borrower’s concerns, providing an explanation or clarification of the reasons the servicer believes the account is correct and, if necessary, making appropriate corrections to the borrower’s account. Once a borrower makes a “qualified written request” RESPA requires loan servicing companies to: (a) provide written notice to the borrower (within 20 days) acknowledging receipt of the request, (b) take appropriate action with respect to the inquiry either by making corrections or providing a written explanation or clarification; and (c) protect the borrower’s credit rating by not reporting to credit bureaus the overdue payments relating to request for 60 days after receiving the request.
(3) Protection of credit rating:
During the 60-day period beginning on the date of the servicer’s receipt from any borrower of a qualified written request relating to a dispute regarding the borrower’s payments, a servicer may not provide information regarding any overdue payment, owed by such borrower and relating to such period or qualified written request, to any consumer reporting agency.
NOTE: This Section provides for damages for any negative credit which is reported to any credit bureau which causes damage to my Clients.
C. RECOVERABLE DAMAGES FOR NON-COMPLIANCE:
Whoever fails to comply with any provision of this section shall be liable to the borrower for each such failure in the following amounts:
In the case of any action by an individual, an amount equal to the sum of any actual damages to the borrower as a result of the failure; and any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $1,000.
(2) Class actions:
In the case of a class action, an amount equal to the sum of any actual damages to each of the borrowers in the class as a result of the failure; and any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not greater than $1,000 for each member of the class, except that the total amount of damages under this subparagraph in any class action may not exceed the lesser of $500,000; or 1 percent of the net worth of the servicer.
In addition to the amounts under paragraph (1) or (2), in the case of any successful action under this section, the costs of the action, together with any attorneys fees incurred in connection with such action as the court may determine to be reasonable under the circumstances.
D. “ACTUAL DAMAGES” MAY PERMIT RECOVERY OR EMOTIONAL DAMAGES SUFFERED DUE TO NON-COMPLIANCE:
NOTE: If a lender or loan servicer breaches this duty, a borrower may recover any “actual damages” proximately caused. “Actual damages” includes time spent on the case (and lost wages if required to be away from work), attorney fees, and there is legal precedent for the recovery of emotional distress damages for a loan servicer’s failure to comply with RESPA. See Johnstone v. Bank of America, N.A., 173 F.Supp.2d 809, 814-16 (N.D.Ill.2001) (RESPA plaintiffs may recover for mental suffering); Ploog v. HomeSide Lending, Inc., 209 F.Supp.2d 863, 870 (N.D.Ill.2002); and Rawlings v. Dovenmuehle Mortgage, Inc., 64 F.Supp.2d 1156, 1166 (M.D.Ala.1999). See also Wanger v. EMC Mortgage Corp., 103 Cal.App.4th 1125, 127 Cal.Rptr.2d 685, Cal.App. 5 Dist.,(2002)