In a fact-intensive decision, United States Bankruptcy Judge William C. Hillman recently examined the rights and remedies that the Real Estate Settlement Procedures Act (“RESPA”) grants to debtors, as well as the duties it imposes on mortgage loan servicers.
On June 26, 2007, the Debtor mortgaged her home in Boston to Mortgage Electronic Registration Systems (“MERS”). MERS assigned the mortgage to Bank of America (“BoA”). The Debtor commenced her chapter 7 case three years later on November 2, 2010 and listed a $322,250.00 secured debt to BoA. BoA filed a proof of claim alleging a $377,303.03 secured claim with $63,119.73 in arrears.
On January 21, 2011, the Debtor sent a letter to BoA asking for information on BoA’s claim. The letter, which BoA acknowledged it received on January 28, 2011, contained a catalogue of requests relating to principal, interest, and escrow balances due and owing. The Debtor included a statement in the letter claiming that it “shall serve as a [Qualified Written Request (“QWR”)] under RESPA, 12 U.S.C. § 2605(e).” By letter dated February 10, 2011, BoA acknowledged receiving the letter and indicated that it would substantively respond after undertaking an investigation of the matter.
Mistakenly believing that the response period imposed on BoA was 30 days, the Debtor filed her complaint on March 30, 2011. The complaint alleged that BoA had failed to provide a written response to the Debtor’s letter, which constituted a violation of 12 U.S.C. § 2605(e) and constituted a pattern or practice of noncompliance causing damages. The complaint further alleged that she suffered “anxiety, fatigue, loss of sleep, stress, mental anguish, and emotional distress” directly and proximately caused by BoA’s inaction. She sought monetary damages and attorney’s fees as a result. BoA ultimately responded on April 27, 2011 and asserted that the January 21, 2011 letter omitted information essential to a QWR.
On March 5, 2012, BoA filed a motion to dismiss the complaint for failure to state a claim. The court condensed BoA’s motion into three arguments: (1) the letter did not constitute a QWR; (2) BoA timely mailed its response; and (3) the Debtor did not adequately plead damages.
As to the first argument, the court found that the Debtor’s written request for detailed information satisfied the requirements for a writing to be considered a QWR under the RESPA statute. In so determining, the court rejected BoA’s contention that the Debtor was required to include a statement in her letter explaining why she believed her account to be in error. A letter can be considered a QWR if it contains a detailed request for information and includes the mortgagee’s name and account.
Next, the court found that, while the current form of RESPA requires a loan servicer to respond to a QWR within 30 days, the applicable response period at the time in question was 60 days. Excluding legal holidays and weekends, the court concluded that RESPA obligated BoA to respond to the letter it received on January 28, 2011 by April 25, 2011. BoA acknowledged that its letter of April 27, 2011 was late, but asserted that the Debtor was not damaged by the brief delay. The court found that BoA’s late response gave rise to a cause of action under RESPA.
As to BoA’s third argument, whether the Debtor had adequately pleaded damages, the court found the Debtor’s complaint deficient on its face on the grounds that the Debtor filed the complaint on March 30, 2011, while a claim for actual damages could not have ripened until April 26, 2011, the day following the response deadline. In granting the motion to dismiss, the court found it wholly implausible that, in the interim, the Debtor could have suffered the damages alleged in the complaint. The court also rejected the Debtor’s assertion that BoA had engaged in a pattern of noncompliance.
Contributed by:
Aaron S. Todrin, Esq.
Jeffrey J. Cymrot, Esq.
84 State Street, 8th Floor
Boston, MA 02109
p: (617) 720-0099 x 102
f: (617) 720-0366
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