Russell Jessee is a member of the Charleston office of Steptoe & Johnson, PLLC. He heads the firm’s Business Litigation Group. Russell defends banks and other businesses in all manner of disputes, and he strives to reach resolutions that make business sense for his clients. He does not litigate for the sake of litigation. Rather, he seeks efficient resolutions so clients can focus on what they do best – running their businesses. He can be reached at Russell.Jessee@Steptoe-Johnson.com or 304-353-8103. Sarah Ellis also is a member of the Charleston office of Steptoe & Johnson, PLLC. Her love of business transactions stems from her childhood when she accompanied her dad, a real estate developer and contractor, to his office. In addition to transactions, Sarah works closely with banking clients on collateral, bankruptcy, and collection issues. She can be reached at Sarah.Ellis@Steptoe-Johnson.com or 304-353-8127. reporting adverse loan information to CRAs even after receiving his letter. A letter from Patrice Johnson challenged Caliber’s refusal of a loan modification because of a priority lien by a solar panel company. Ms. Johnson’s letter challenged the existence of “title issues” from the solar panel company’s lien. While Caliber eventually modified Ms. Johnson’s loan, Caliber declined to stop reporting adverse information to CRAs about Ms. Johnson’s purported delinquent payments on her home loan during the time period before her loan was finally modified. On appeal of the trial court’s ruling, the Fourth Circuit concluded that if Mr. Morgan could prove his alleged facts, his letter was, indeed, a QWR to which Caliber should have responded. The trial court found that because the letter did not specifically identify disputed payments, it was not a QWR, and dismissed Mr. Morgan’s complaint. The Fourth Circuit concluded that the trial court erred. Specifically identifying disputed payments is not required for a complaint letter to be a QWR. “[T]he Morgan Letter include[d] the name, account number, and other information that would ‘enable[ ] the servicer to identify’ the account, and it includes ‘reasons for the belief of the borrower, to the extent applicable, that the account is in error.’” The letter “also detail[ed] conflicting balance information received from [Caliber] and the credit reporting service.” While Mr. Morgan did not tell Caliber which amount he thought he actually owed, “this type of discrepancy is sufficient to indicate a dispute exists as to the servicing of [the] loan.” On the other hand, the Fourth Circuit agreed with the trial court that Ms. Johnson’s letter, which contested Caliber’s denial of her loan modification, was not a QWR. The Fourth Circuit distinguished between a servicing complaint covered by RESPA and a contractual dispute about a loan modification. “A loan modification is a contractual issue, not a servicing matter,” the Fourth Circuit stated. Because “[t]he only error alleged in the Johnson Letter is denial of the loan modification based on title issues regarding the solar panel company lien,” the complaint “[did] not fall within the ambit of ‘servicing’ so as to trigger RESPA’s protections against providing adverse information to credit reporting agencies.” In sum, determining whether a borrower’s complaint letter is related to servicing and provides enough information to trigger a duty to respond to the complaint is tricky. With the Morgan decision, the Fourth Circuit has given home loan servicers some welcome clarity. These materials are public information and have been prepared solely for educational purposes. These materials reflect only the personal views of the authors and are not individualized legal advice. It is understood that each case is fact-specific and that the appropriate solution, in any case, will vary. Therefore, these materials may or may not be relevant to any particular situation. Thus, the authors and Steptoe & Johnson, PLLC cannot be bound either philosophically or as representatives of their various present and future clients to the comments expressed in these materials. The presentation of these materials does not establish any form of attorney-client relationship with the authors or Steptoe & Johnson, PLLC. While every attempt was made to ensure that these materials are accurate, errors or omissions may be contained therein, for which any liability is disclaimed. 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.” Pub. 13 2022 I Issue 2 Summer 27 West Virginia Banker
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