Opinion ID: 182516
Heading Depth: 1
Heading Rank: 3

Heading: Plaintiffs’ RESPA Claims

Text: Plaintiffs contend that GMAC Mortgage violated RESPA in a number of ways, including failing to give notice of the transfer of their mortgage, failing to respond promptly to qualified written requests for information, and failing to correct wrong information provided to credit-reporting agencies. The district court did not reach the merits of those claims because it found 14 No. 09-2182 that GMAC Mortgage was entitled to the protection of the RESPA safe harbor provision in 12 U.S.C. § 2605(f)(4). We address first the safe harbor provision and then the substantive claims.
Although RESPA provides a private right of action for violations of its requirements, it also includes a nonliability or “safe harbor” provision, which provides: A transferor or transferee servicer shall not be liable under this subsection for any failure to comply with any requirement under this section if, within 60 days after discovering an error (whether pursuant to a final written examination report or the servicer’s own procedures) and before the commencement of an action under this subsection and the receipt of written notice of the error from the borrower, the servicer notifies the person concerned of the error and makes whatever adjustments are necessary in the appropriate account to ensure that the person will not be required to pay an amount in excess of any amount that the person otherwise would have paid. 12 U.S.C. § 2605(f)(4). GMAC Mortgage is not entitled to the protection of the safe harbor in section 2605(f)(4). Although the parties have debated other requirements in the safe harbor provision, GMAC Mortgage did not argue, and nothing in the record shows, that GMAC Mortgage No. 09-2182 15 “notif[ied] the person concerned of the error,” as required to invoke the protection. On this basis alone, GMAC Mortgage was not eligible for protection in the RESPA safe harbor. The district court’s finding otherwise was error. In the district court, GMAC Mortgage argued that it was protected by the safe harbor because, when all was said and done, the plaintiffs did not pay any money in excess of what they otherwise would have paid, and GMAC Mortgage corrected all errors in the plaintiffs’ account within 60 days after receiving the plaintiffs’ December 17, 2004 letter, and before the plaintiffs filed suit. Under this view of the statute, the defendant must have corrected the error only before plaintiffs filed suit, even if the defendant did not discover and correct the error before receiving written notice of it from the borrower. Plaintiffs contend that the safe harbor provision requires the defendant to have corrected the error both before suit was filed and before the defendant received written notice of the error from the borrower. Because GMAC Mortgage’s failure to provide notice keeps it out of the safe harbor in this case, we express no view on the district court’s reasoning on this point.
The plaintiffs argue that the letters they sent on October 6, November 15, December 2, December 9 and December 17 were qualified written requests. They contend that GMAC Mortgage violated RESPA by re- 16 No. 09-2182 porting their account as delinquent to the credit bureaus within the 60-day window after each of those qualified written requests was received, and that GMAC Mortgage also failed to investigate properly or to take corrective action in response to the October 6, November 15, December 2 and December 9 qualified written requests. RESPA defines a qualified written request as follows: 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— (i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and (ii) 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. 12 U.S.C. § 2605(e)(1)(B). GMAC Mortgage argues that the letters in question were not qualified written requests because the letters “do not identify an error in plaintiffs’ account or provide any statement of the reasons plaintiffs believe their account was in error.” GMAC Mortgage Br. 16.3 3 Although GMAC Mortgage conducted an investigation and corrected the plaintiffs’ account in response to their Decem- (continued...) No. 09-2182 17 Relying on several district court decisions, GMAC Mortgage contends that letters that “merely dispute a debt or request information are not ‘qualified written requests,’ and do not trigger the obligations under section 2605.” Id., citing Moore v. Federal Deposit Ins. Corp., 2009 WL 4405538, at  (N.D. Ill. Nov. 30, 2009) (plaintiffs’ letters requesting information regarding reinstatement of a defaulted mortgage loan and the amounts of delinquent mortgage payments due did not relate to “servicing” and thus were not qualified written requests), Champlaie v. BAC Home Loans Servicing, LP, 2009 WL 3429622, at  (E.D. Cal. Oct. 22, 2009) (plaintiffs’ claim that lender failed to respond in violation of RESPA was dismissed because plaintiff did not allege that his written request for rescission of the loan related to the servicing of his loan and thus his communication was not a qualified written request), Keen v. American Home Mortgage Servicing, 664 F. Supp. 2d 1086, 1097 (E.D. Cal. 2009) (plaintiff’s demand to cancel trustee’s sale of home and for rescission disputed the validity of the loan but did not dispute the servicing of the loan and was not a qualified written request), Pettie v. Saxon Mortgage Services, 2009 WL 1325947, at  (W.D. Wash. May 12, 2009) (plaintiffs’ “inquiry letter” disputing amount owed and requesting 26 sets of documents did not offer reasons for their dispute and thus was not a qualified written 3 (...continued) ber 17th letter, it disputes whether that letter was a qualified written request under the technical requirements of the statute. GMAC Mortgage Br. 17. 18 No. 09-2182 request under section 2605(e)(1)(B)); MorEquity, Inc. v. Naeem, 118 F. Supp. 2d 885, 900-01 (N.D. Ill. 2000) (letter seeking information about the validity of a loan and mortgage documents but making no inquiry as to the account balance or credit for periodic payments did not relate to “servicing” and was thus not a qualified written request). By GMAC Mortgage’s argument, a lender would have no obligation to respond to a borrower who expressed her belief that her account was in error but was unable to provide specific reasons for that belief, an untenable result under the language of the statute. RESPA does not require any magic language before a servicer must construe a written communication from a borrower as a qualified written request and respond accordingly. The language of the provision is broad and clear. To be a qualified written request, a written correspondence must reasonably identify the borrower and account and must “include 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.” 12 U.S.C. § 2605(e)(1)(B) (emphasis added). Any reasonably stated written request for account information can be a qualified written request. To the extent that a borrower is able to provide reasons for a belief that the account is in error, the borrower should provide them, but any request for information made with sufficient detail is enough under RESPA to be a qualified written request and thus to trigger the servicer’s obligations to respond. See 12 U.S.C. §§ 2605(e)(1)(a), (e)(2), and (e)(3); see also Garcia v. Wachovia Mortgage Corp., 676 No. 09-2182 19 F. Supp. 2d 895, 909 (C.D. Cal. 2009) (when construed in light most favorable to borrower, letter was a qualified written request even though it did not contain a statement of reasons for borrower’s belief of error; letter provided sufficient detail regarding “other information” being sought); Rawlings v. Dovenmuehle Mortgage, Inc., 64 F. Supp. 2d 1156, 1162 (M.D. Ala. 1999) (plaintiffs’ claims survived summary judgment where court found that descriptions of payments made to a prior servicer sufficiently stated plaintiffs’ reasons for their belief that their account was in error and were qualified written requests). We turn to the disputed letters.
The plaintiffs’ October 6th letter included content that was clearly sufficient to be a qualified written request. The three-page letter described in great detail the difficulties the plaintiffs encountered at the hands of RBC. The letter recounted that their first payment was due in August 2003, but that RBC failed to process the plaintiffs’ August payment in a timely manner, and that a discrepancy arose between the plaintiffs and RBC as to whether the plaintiffs had made their payments or not. The letter described how RBC raised the plaintiffs’ monthly payment amount without informing them of the change, and that each of the plaintiffs’ attempts to communicate with RBC was rebuffed until RBC at last acknowledged its error and dismissed its foreclosure action against the plaintiffs in July 2004. The letter then reported that RBC did not cash the plain20 No. 09-2182 tiffs’ August and September 2004 payments, but that GMAC Mortgage returned the plaintiffs’ September 2004 payment uncashed, even though that payment had been sent to RBC, and that GMAC Mortgage in- formed the plaintiffs that their September 2004 payment was insufficient to cover the amount they then owed on their mortgage account, which, according to GMAC Mortgage, was five months overdue. The plaintiffs, naturally, wrote this description of the history of their loan’s servicing from their perspective, and without access to the (incorrect) information that GMAC Mortgage had acquired from RBC. But the letter was certainly a thorough statement of “the reasons for the belief of the borrower, to the extent applicable, that the account is in error” under section 2605(e)(1)(B). The letter then continued, requesting very specific information. Plaintiffs asked that RBC explain why it had cashed the checks they had sent in July if, as they had been told by GMAC Mortgage, RBC had sold their account to GMAC Mortgage in May. The letter also sought an accounting of the funds plaintiffs had paid in July and sought information related to the transfer— specifically, why RBC had not forwarded their checks to GMAC Mortgage, why GMAC Mortgage had delayed initiating contact with them after purchasing their account, and why GMAC Mortgage would purchase a “nonperforming” mortgage. Some of this information might have been “unavailable or [unable] to be obtained by the servicer” under section 2605(e)(2)(C), but whether the information the plaintiffs sought was unavailable or whether their questions were unanNo. 09-2182 21 swerable does not negate the fact that they had “provide[d] sufficient detail to the servicer regarding other information sought by the borrower” under section 2605(e)(1)(B). Their October 6th letter was a qualified written request, and GMAC Mortgage was obligated to respond. Of course, the plaintiffs did not send their October 6, 2004 letter directly to GMAC Mortgage. They sent it to HUD, which forwarded it to GMAC Mortgage. The statute requires that qualified written requests be received “from the borrower (or an agent of the borrower).” 12 U.S.C. § 2605(e)(1)(A). We do not have difficulty interpreting that requirement, under the circumstances of this case, to include HUD’s intercession on the plaintiffs’ behalf. RESPA is a consumer protection statute, and on summary judgment we must view the facts in the plaintiffs’ favor. Here, the record amply demonstrates that the plaintiffs had exhausted every reasonable avenue in their communications with RBC, yet in the fall of 2004, they were back in the same nightmare with a different company. Again they were being accused of not paying their mortgage, and again they were being threatened with foreclosure. Their confusion and desperation at this point were palpable, and they reasonably sought help from HUD. Besides, when it received the plaintiffs’ letter, GMAC Mortgage tacitly acknowledged that the letter was a request for information and raised a dispute with their account. After all, in its response to HUD, GMAC Mortgage provided a detailed accounting of the history and transfer of the 22 No. 09-2182 plaintiffs’ mortgage and captioned its letter as a response to the plaintiffs’ “payment dispute.” After the months the plaintiffs had spent writing to and getting nowhere with RBC, and due to the fact that GMAC Mortgage received the plaintiffs’ October 6th letter and treated it as a payment dispute and as a request for information, the fact that GMAC Mortgage received the letter from HUD and not directly from the plaintiffs does not prevent the plaintiffs’ October 6th letter from being a qualified written request under RESPA.
In the plaintiffs’ November 15th letter, they explained their understanding that, based on information they had received from GMAC Mortgage, there were seven payments due on their mortgage of $1,598 each, for a total of $11,186. A check for that amount was enclosed with the letter. The plaintiffs also set forth their expectations for how GMAC Mortgage would handle their account going forward, including that GMAC Mortgage would provide any information they request, that any requested information and any changes to their account would be in writing, and that their mortgage pay- ments would be applied in a timely manner. However, the plaintiffs did not raise any disputes or errors in their account, and their “expectations” were not requests for information. We cannot construe the plaintiffs’ November 15th letter as a qualified written request under RESPA. No. 09-2182 23
In the plaintiffs’ letter of December 2nd, they explained that they sent a check to GMAC Mortgage for $11,186 on November 26, 2004, which GMAC Mortgage had not yet cashed. Their letter requested that GMAC Mortgage cash their check and apply the funds to their account because “it becomes a major disruption to have large sums of money unaccounted for.” Although this letter certainly pertained to the servicing of their account, the plaintiffs were not requesting information and were not stating a belief that their account was in error. The plaintiffs were requesting that GMAC Mortgage process their payment more quickly, but in and of itself, that request does not seem to be based on any belief that an underlying error was causing the delay. The plaintiffs’ December 2nd letter was not a qualified written request under RESPA.
The plaintiffs’ letter of December 9th was similar to their letter of December 2nd. They recounted how GMAC Mortgage returned their August and September 2004 mortgage payments and how they sent a check for $11,186 in response to GMAC Mortgage’s statement that $9,843 was necessary to bring the plaintiffs’ account current. They stated that GMAC Mortgage’s “refusal to process this check when only having an association with the account for two months raises questions in our minds about your motivation for acquiring our ac- count,” and that: 24 No. 09-2182 the chaotic state that existed when you acquired the account was a direct result of the extreme mis- management of our account by RBC. However your actions also give me pause to wonder if your interest is more in acquiring our home than servicing the account. Additionally, it is extremely questionable as to why your company would assume an account that appeared to be in as severe disarray as the one received from RBC. The plaintiffs then asked for “quick resolution of whatever issues remain since the transfer of this account to your company by processing this and all future payments immediately.” Although the plaintiffs were understandably frustrated that GMAC Mortgage had not yet cashed their $11,186 check and applied that amount to their account, we do not interpret the plaintiffs’ December 2nd letter as a statement of their belief that GMAC Mortgage’s servicing of their account was in error. Again, their letter expressed their desire that GMAC Mortgage process their payment more quickly, which is not a statement of error or a request for information. They also hinted at “issues” remaining since GMAC Mortgage acquired their account from RBC, but we cannot reasonably construe the plaintiffs’ use of the word “issues” as a statement of error, or as a request for information. The plaintiffs’ December 9th letter was not a qualified written request.
The plaintiff’s December 17th letter was unequivocally a qualified written request under RESPA. The first senNo. 09-2182 25 tence of the letter said: “I am disputing your attempt to collect on the above referenced account.” The plaintiffs stated that they had sent GMAC Mortgage the full amount required to bring the account current, but by then GMAC Mortgage had returned their $11,186 check and had advised them that it was seeking foreclosure against them. Against this backdrop, the plaintiffs’ statement that GMAC Mortgage had “refused to process checks to alleviate any unnecessary actions or undue harm” was a statement of their belief that their account was in error. 4 They also very clearly requested specific information regarding their account—namely, an explanation of how their account balance increased from $229,098 to $248,298 over a two-month time span. The December 17th was also a qualified written request. Having found that the plaintiffs’ October 6th and December 17th letters were qualified written requests under RESPA, we leave it to the district court to resolve on remand whether GMAC Mortgage satisfied its obligations to investigate and respond under 12 U.S.C. §§ 2605(e)(1)(A) and 2605(e)(2) and to refrain from reporting the plaintiffs as delinquent to the credit reporting bureaus under 12 U.S.C. § 2605(e)(3). On remand, the district court will also need to consider the plaintiffs’ claims that GMAC Mortgage violated 4 The context explains why this December 17th letter was a qualified written request and the plaintiffs’ December 2nd and 9th letters were not, even though all three expressed the plaintiffs’ belief that GMAC Mortgage had failed to process their payments in a timely manner. 26 No. 09-2182 RESPA by not sending them an appropriate notice that their loan had been transferred and by charging them late fees within 60 days of the transfer. See 12 U.S.C. § 2605(c) (requiring transferee servicer to notify the borrower of the transfer within 15 days of the effective date of transfer, with certain exceptions); 12 U.S.C. § 2605(d) (prohibiting transferee servicer from imposing a late fee if borrower’s payment is received by the transferor servicer before the payment due date). Summary judgment for GMAC Mortgage on the plaintiffs’ RESPA claims is reversed, and we remand to the district court for further proceedings.