Banks & Banking – Mortgages – RESPA – Loss Mitigation Procedures – Only One Required

Mangum v. First Reliance Bank (Lawyers Weekly No. 002-093-17, 13 pp.) (R. Bryan Harwell, J.) 4:16-cv-02214; D.S.C.

Holding: Even if, during a loan mitigation procedure, a loan servicer repeatedly asked plaintiff for documents she had already provided, since plaintiff had already successfully obtained loan mitigation from a previous loan servicer, the subsequent loan servicer did not violate the Real Estate Settlement Procedures Act.

The court grants defendants’ motion to dismiss plaintiff’s RESPA claim. The court declines to exercise jurisdiction over plaintiff’s state law claims.

Under the mortgage servicing rules implemented by the Consumer Financial Protection Bureau, a borrower may not bring an action for violation of the loss mitigation rule if that borrower has previously availed herself of the loss mitigation process. In fact, the loss mitigation rule does not require that a borrower actually receive a loan modification; instead, it requires simply that a completed application be properly processed and considered.

The outcome in this case is not affected by the fact that plaintiff’s previous loan modification occurred prior to the effective date of the RESPA section under which plaintiff brings her claim.

Motion granted.