The United States Court of Appeals for the Eleventh Circuit recently reversed a lower court and held that the plaintiff borrowers were entitled to pursue their claims under the Real Estate Settlement Procedures Act (“RESPA”) based on a servicer’s alleged improper response to their QWR. See Ranger v. Wells Fargo Bank N.A., 2018 WL 6523213 (11th Cir. Dec. 11, 2018). In 2012, the lender initiated a foreclosure suit against the borrowers based on the servicer’s claim that the borrowers had missed their mortgage payments. In 2014, the borrowers sent the servicer a QWR under RESPA contending that any allegation that they were derelict in making their payments was false. In response, the servicer confirmed its finding that the borrowers had missed payments. In 2015, however, the trial court in the foreclosure action found that the lender was not entitled to foreclose, dismissed the action, and awarded the borrowers some of their attorneys’ fees. Six months later, the servicer sent the borrowers a letter again claiming they owed over $100,000 on their loan. The borrowers responded with another QWR and immediately filed a lawsuit alleging violations of RESPA, among other claims. The trial court dismissed the borrowers’ RESPA allegations, finding that they had not sufficiently alleged damages and, to the extent they had, they did not assert a connection between the RESPA violation and the damages.
On appeal, the Court affirmed in part and reversed in part. The Court first acknowledged that a borrower claiming that a servicer violated its QWR responsibilities must show both actual damages and a causal link between the violation and the damages. In this case, the Court found that the borrowers had sufficiently pleaded damages based on emotional distress, the payment of additional fees and higher interest, and damage to the borrowers’ credit score. The Court further found that the borrowers linked these alleged damages with the servicer “insist[ing] upon pressing forward with the foreclosure, even after the 2014 QWR, even after the state court dismissed the foreclosure suit, and even after Plaintiffs sent the 2015 QWR.” Nonetheless, the Court found that the borrowers had not alleged enough of a link between their claim of attorneys’ fees damages and the alleged RESPA violations, in large part because they had been awarded fees as part of the foreclosure dismissal and “[n]o matter what, if Plaintiffs were dissatisfied with their recovery in state court, they had to appeal that through the state system.” Accordingly, the Court reinstated the RESPA claim as it pertains to non-attorneys’ fees damages.