Commercial Litigation

Limiting the Scope of Qualified Written Requests Under RESPA

“Dear Servicer, Please provide all documents concerning the Loan, as required by RESPA. Sincerely, Borrower”

With the increase in residential mortgage defaults across the United States, mortgage servicers have also seen a rise in what is being termed a “qualified written request” (“QWR”) under the Real Estate Settlement Procedures Act (“RESPA”) from borrowers. Many of these alleged QWRs read like the title of this article, request voluminous documents, and cost servicers valuable time and resources to answer. When reviewing these purported QWRs, servicers should take a closer look to determine whether they actually qualify as such under RESPA.

Under 12 U.S.C. § 2605(e), a QWR means “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 the other information sought be the borrower.” Servicers must acknowledge receipt of the QWR within twenty business days of receipt by written response and take action on the inquiry, if necessary, within sixty business days of receipt of the QWR. Violating these provisions can result in liability for the borrower’s
actual damages and costs, including attorneys’ fees. 12 U.S.C. § 2605(f). An additional $1,000.00 can be awarded to the borrower if a pattern or practice of non-compliance with these requirements is found. Id.

Generally, it is relatively simple for servicers to investigate specific allegations of servicing errors and answer the same in an economic fashion and within the given time frames set by RESPA. However, some borrowers have latched onto the language “regarding other information sought by the borrower” at the end of Section 2605(e) and have used it to request extensive documents and other information concerning the loan that is not servicing-related. For example, borrowers will request entire loan origination files, the original Note or Security Instrument, information regarding attempted rescission of the loan, or other nonservicing issues. In effect, these borrowers are trying to conduct improper discovery without filing suit, stall default proceedings
on their loans, or submit the request for some other reason that is not supported by the intention of the statute.

Case law from numerous federal districts has shed light on the extent of what “other information sought by the borrower” can be sought through this Section. Specifically, courts have limited those requests for “other information” to information related to the servicing of the loan. Servicing is defined as “receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan, including amounts for escrow accounts…, and making the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the loan.” 12 U.S.C. § 2605(i)(3). As such, servicers would only be required to respond to requests relating to payment issues, not origination, validity of loan, or other issues frequently alleged by borrowers. When reviewing these purported QWRs, servicers should look to what documents or other information that is actually being requested and compare it to the definition of  “servicing” as set forth in RESPA to see if it actually fits that description. Even if the request does not require an answer, it is the better practice to respond to the borrower, in writing, advising of such. Because this is a quickly expanding area of the law, servicers should consider consulting an attorney concerning any questions as to whether to answer the alleged QWR.

By J. Allen Smith and Jeremy J. Overbey