The United States District Court for the Eastern District of New York recently granted a lender’s motion to dismiss an action in which the borrower alleged violations of the Real Estate Settlement Procedures Act (“RESPA”) for the lender’s failure to properly respond to three qualified written requests (“QWRs”) and for improperly reporting the borrower’s credit score to reporting agencies despite having received notices of error. See Jackson v. Caliber Home Loans, 2019 WL 3426240 (E.D.N.Y. July 30, 2019). In 2014, the borrower received two home mortgage loans from the lender’s predecessor-in-interest and, two years later, the borrower filed for Chapter 7 bankruptcy protection. The borrower subsequently signed two loan modification agreements with the lender which were endorsed by the bankruptcy court. In 2018, counsel for the borrower sent the lender three letters requesting information on both loans and seeking to have the lender treat the letters as a request for information and as a notice of error. The lender responded to two of the three letters addressing some requests for information while refusing to answer others. The borrower brought this action alleging two violations of RESPA and seeking both actual and statutory damages as a result. First, the borrower claimed the lender violated § 2605(e)(3) by providing information to consumer reporting agencies regarding overdue payments allegedly owed by the borrower that were related to her QWRs. Second, the borrower claimed that the lender violated § 2605(e)(2)(C) by failing to provide the borrower with the information and documentation requested, or an explanation why the information sought was unavailable, no later than 60 days after receipt of the borrower’s QWR.
The Court first had to determine whether the three letters sent by the borrower’s counsel were QWRs, thereby invoking RESPA’s private right of action for a servicer’s failure to comply with the Act. See § 2605(e)(1)(B). A QWR can be classified as either a request for information, which seeks information relating to the servicing of a mortgage loan, or as notice of error, which asserts an error relating to the servicing of a mortgage loan. See 12 C.F.R. § 1024.35(a); 12 C.F.R. § 1024.36(a). If a servicer receives a notice of error, it must comply with the provisions of § 2605 which include, inter alia, refraining from sending the borrower’s information regarding any overdue payment and relating to the QWR for a period of 60 days. See § 2605(e)(2)(A)-(C); § 2605(e)(3). The Court found that the first two letters sent constituted requests for information because they requested information regarding the servicing of loans while the third letter—which sought information related to the origination and alleged modification of the borrower’s loans—fell outside the ambit of § 2605. Next, the Court held that none of the three letters sent by the borrower’s counsel constituted a notice of error because they failed to assert an error with the servicing of the lender’s mortgage loans with requisite specificity. See § 2605(e)(1)(B)(ii). Therefore, the Court held that the borrower failed to state a claim because none of the letters qualified as a notice of error thereby forbidding lender from sending the borrower’s information regarding overdue payment to a consumer reporting agency under § 2605(e)(3).
The Court found, however, that the borrower properly alleged that the lender failed to provide her with all of the requested information regarding her loans and/or an explanation of why the requested information was unavailable as required by § 2605(e)(2)(C). Even so, the Court held that the borrower failed to allege any actual damages as a result of lender’s RESPA violations and failed to allege a significant number of RESPA violations to entitle her to recover statutory damages. Accordingly, the Court granted the lender’s motion to dismiss the complaint and denied the borrower’s motion to amend.