Consumer Protection – Borrower’s letter triggered RESPA protections

Listen to this article

Where a borrower’s letter to his loan servicer included the name, account number and other information that would “enable[] the servicer to identify” the account, and it explained why the borrower believed the account was in error, it constituted a qualified written request or QWR, under the Real Estate Settlement Procedures Act or RESPA.

Background

The issue is whether letters sent by borrowers Rogers Morgan and Patrice Johnson to their loan servicer, Caliber Home Loans, constitute QWRs under RESPA or the related Consumer Financial Protection Bureau Regulation X, such that they triggered an obligation for Caliber to cease providing adverse information about appellants’ accounts to credit reporting agencies.

The district court concluded (1) the Morgan letter is not specific enough to constitute a QWR and (2) the Johnson letter is not a QWR because it “challenges only [appellee’s] stated denial for the loan modification,” which “does not implicate servicing of the loan.”

Morgan letter

The district court erred by concluding the Morgan letter is not a QWR and does not “trigger[] RESPA’s prohibition on credit reporting” because it does not “dispute specific payments.” RESPA does not limit the reporting of overdue payments to disputes of specifically identified payments but includes any “qualified written request relating to a dispute regarding the borrower’s payments.” The Morgan letter is a QWR subject to RESPA, as it is “a written correspondence” that articulates a “statement of reasons” in “sufficient detail” to indicate to appellee why Morgan believed the credit reporting was in error.

Specifically, the Morgan letter includes 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.” Morgan described the conflicting balance information he had received from his employer’s reports, showing that he “[owed appellee] $16,806,” and appellee’s representative, who allegedly identified the balance as “$30,656.89” in addition to “$630.00 on [his] record” for “late charges.”

Further, the district court erred by concluding the Morgan letter is not a QWR due to a “lack of specificity.” The Morgan letter is not a general or vague complaint. To the contrary, as noted, the Morgan letter includes an account number, as well as a reference to an agent and that agent’s ID number related to a specific phone call Morgan had with a representative of appellee to discuss the conflicting balance information.

The Morgan letter also details conflicting balance information received from appellee and the credit reporting service. Although the Morgan letter does not state which amount, if either, is the correct amount, this type of discrepancy is sufficient to indicate a dispute exists as to the servicing of loan.

Johnson letter

Correspondence limited to the dispute of contractual issues that do not relate to the servicing of the loan, such as loan modification applications, do not qualify as QWRs. The Johnson letter does not relate to any dispute of Johnson’s payments, or assert an error related to the servicing of the loan. Rather, the Johnson letter merely challenges the denial of a modification of the terms of Johnson’s loan. The only error alleged in the Johnson letter is denial of the loan modification based on title issues regarding the solar panel company lien. This does not fall within the ambit of “servicing” so as to trigger RESPA’s protections against providing adverse information to credit reporting agencies.

Affirmed in part, reversed in part and remanded.

Concurrence/dissent

(Richardson, J.): I disagree that the Morgan letter constitutes a “qualified written request” triggering protection under RESPA. The Morgan letter fails to identify the believed error and provides no “statement of the reasons” for believing that unidentified error exists.

Morgan v. Caliber Home Loans Inc. (Lawyers Weekly No. 001-035-22, 15 pp.) (Stephanie Thacker, J.) (Julius N. Richardson, J., concurring in part and dissenting in part) Case No. 20-1745. Feb. 22, 2022. From D. Md. at Greenbelt (Paula Xinis, J.) Phillip R. Robinson for Appellants. Matthew Allen Fitzgerald for Appellee. 4th Cir.