What is RESPA and Why Should You Care? Part 2

Lucius James Wallace

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Litigation Lawyer - Tulsa, OK

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One RESPA issue raised by servicers is the contention that the QWR was required to have been, but was not, sent to a designated address. RESPA itself contains no requirement that a QWR be sent to a specific address. [1]

Regulation X, 24 CFR 3500.21(e)(1), designed to implement RESPA provides “By notice either included in the Notice of Transfer or separately delivered by first-class mail, postage prepaid, a servicer may establish a separate and exclusive office and address for the receipt and handling of qualified written requests." Servicers may claim to provide such an address in the notice of transfer. This regulation appears to require servicers to establish both an address and office and that both be separate and exclusive. If the listed address is used for any other correspondence or customer service functions, or if the address is for the corporate mailroom, then the address is not exclusive. Multiple courts have rejected the separate and exclusive address as a defense where the defendant failed to establish that the address was separate and exclusive. [2]

In addition, the statutory duty is triggered by receipt of a QWR and not by where or how it was sent. At least one court evaluating the issue of separate and exclusive rejected imposing such an additional requirement under RESPA. [3] The Vought Court examined the statute, the regulation, and existing case law from the Northern District of Illinois and stated that the statute “makes no mention of any requirement regarding how borrowers must send their QWR’s." [4] “RESPA is to be ‘construed liberally in order to best serve Congress’ intent.’" [5]

RESPA provides that any loan servicer who violates the provisions may be liable to an individual borrower for: (1) actual damages and (2) additional damages “in the case of a pattern or practice of noncompliance" not to exceed $1000. [6]

Courts have interpreted the requirement to plead actual damages liberally, [7] and have held such claims as emotional distress, time spent away from employment, and even negative credit ratings to be recoverable as “actual damages" under § 2605(f)(1)(A). [8]

In Hrubec v. National Railroad Passenger Corp., the Court analyzed what could constitute actual damages. [9] The Hrubec Court determined that actual damages could include emotional or mental distress under 26 U.S.C. § 7341(a)(2), which permits recovery for mental or emotional anguish against non-governmental persons who knowingly or negligently disclose information in violation of 26 U.S.C. § 6103. The Hrubec Court made this determination based on an analysis of a number of other courts' determinations of what constitutes actual damages. [10]

The mortgage servicing industry has vast power over millions of American homeowners. RESPA provides the potential to balance that power for those who follow its requirements.

[1] 12 U.S.C. § 2605(e).

[2] Goldman v. Aurora Loan Services, LLC 2011 WL 3845498 (N.D. Ga.); Lee v. Equifirst Corp, 2010 WL 4320714 (M.D. Tenn.); McLean v. GMAC Mortgage Corp, Inc., 2008 WL 5246149 (S.D. Fla.).

[3] Vought v. Bank of America, N.A., 2010 WL 4683599 (C.D. Ill. 2010).

[4] Id.

[5] Rawlings v. Dovenmuehle Mortg., Inc., 64 F.Supp.2d 1156, 1165 (M.D.Ala. 1999)(citing, Ellis v. General Motors Acceptance Corp., 160 F.3d 703, 707 (11th Cir.1998) (addressing the remedial nature of the Truth in Lending Act (“TILA"))

[6] 12 U.S.C. § 2605(f)(1).

[7] Yulaeva v. Greenpoint Mortg. Funding, Inc., No. CIV. S-09-1504 LKK/KJM, 2009 WL 2880393, at *15 (E.D.Cal. Sept.3, 2009)

[8] See, e .g., Anderson v. Barclays Capital Real Estate, Inc., No. 3:09CV2335, 2010 WL 2541807, at *6 (N.D.Ohio June 18, 2010); Arellano v. Am. Home Mortg. Serv., Inc., No. C 09-05103 JSW, 2010 WL 2300986, at *2 (N.D.Cal. June 4, 2010) (listing cases); Allen v. United Financial Mortg. Corp., 660 F.Supp.2d 1089, 1097 (N.D. Cal. 2009).

[9] Hrubec v. National Railroad Passenger Corp., 829 F.Supp. 1502, 1505 (N.D.Ill.1993).

[10] Id.; United States v. Balistrieri, 981 F.2d 916, 931 (7th Cir.1992) (holding that actual damages include emotional distress under the Fair Housing Amendments Act); Biggs v. Village of Dupo, 892 F.2d 1298, 1304 (7th Cir.1990) (holding that actual damages include mental distress under 42 U.S.C. § 1983); Fischl v. General Motors Acceptance Corp., 708 F.2d 143, 148 (5th Cir.1983) (holding that actual damages include mental anguish under the Equal Credit Opportunity Act, 15 U.S.C. § 1691e); and Millstone v. O'Hanlon Reports, Inc., 528 F.2d 829, 834-35 (8th Cir.1976) (holding that actual damages include emotional distress and humiliation under the Fair Credit Reporting Act, 15 U.S.C. § 1681n). See e.g., Johnstone v. Bank of America, N.A., 173 F.Supp.2d 809, 815 (N.D. Ill. 2001).

Additional Resources

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