I Said, “Stop!” ... or at Least I Thought I Did By Russell Jessee and Sarah Ellis, Steptoe & Johnson, PLLC Home loan servicers in West Virginia (and the other states covered by the U.S. Court of Appeals for the Fourth Circuit – Maryland, North Carolina, South Carolina, and Virginia) now have more clarity about borrower complaint letters that trigger a duty under the Real Estate Settlement Procedures Act (RESPA) and Regulation X to respond to the complaints. Under RESPA, a loan servicer has a duty to respond to a “qualified written request” (QWR) received from a borrower “for information relating to the servicing of a loan.” RESPA states that a QWR is “written correspondence” that “includes, or otherwise enables the servicer to identify, the name and account of the borrower” and includes a statement explaining why the borrower believes that “the account is in error.” RESPA requires that servicers “take timely action to respond to a borrower’s requests to correct errors” related to servicing, such as “errors relating to allocation of payments, final balances for purposes of paying off the loan, or avoiding foreclosure, or other standard servicer’s duties.” Regulation X clarifies that “[a] servicer shall comply with the requirements of this section for any written notice from the borrower that asserts an error and that includes the name of the borrower’s mortgage loan account, and the error the borrower believes has occurred.” Regulation X lists 11 specific categories of errors – for example, failure to accept payment, imposition of unreasonable fees, failure to provide an accurate payoff balance when requested – and a catchall of “any other error relating to the servicing of a borrower’s mortgage loan.” Borrowers, however, don’t study RESPA and Regulation X, so their complaint letters are not always models of clarity. This frequently leaves home loan servicers questioning whether their duty to respond has been triggered. In a recent decision, Morgan v. Caliber Home Loans, Inc., the Fourth Circuit provided guidance on what is and is not a QWR. The court considered letters to a servicer from two different borrowers, Rogers Morgan and Patrice Johnson. The trial court, the U.S. District Court for the District of Maryland, concluded that neither letter was a QWR that triggered the servicer’s duty to respond. A letter from Rogers Morgan asked Caliber to correct the amount it reported he owed to credit reporting agencies (CRAs). Caliber reported that Mr. Morgan owed more than $30,000 on his loan, but he attached a “report from D.C. Gov[ernment] stating as of 10/13/2015, I owe Caliber $16,806.” Mr. Morgan alleged that Caliber continued Borrower Complaint Letters That Trigger a Duty to Respond wvbankers.org 26 West Virginia Banker
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