QUESTION
We dealt with a complaint by a borrower who had sent a notice
of error to the wrong address at our company. Our disclosures are clear about
which address to send these letters to; however, this borrower was miffed that
he could not be sure, so he sent it to a general mailbox. When we didn’t
respond, he escalated the complaint to our regulator. Why should we be
responsible if a borrower can’t read plain English and mistakenly sends his letter to the
wrong company address?
ANSWER
The Real Estate Settlement Procedures Act, like the Truth-in-Lending
Act, offers mortgage loan servicers the opportunity to designate an address to
which requests for information (RFIs) or notices of error (NOEs) (some of which
are considered “qualified written requests” or QWRs under the RESPA statute)
must be sent.
The idea that a financial institution should treat borrower NOEs
according to a borrower’s level of sophistication has not fared well in the
courts. For example, the U.S. Court of Appeals for the 2nd Circuit rejected the
idea. It found that the borrower in a similar situation had adequate notice of
the loan servicer’s designated address for the receipt of QWRs and that the
servicer’s statutory duty to respond to the borrower’s letter was never
triggered.
Crucially, the 2nd Circuit refused to consider another argument raised
by the borrower because he hadn’t pursued it until his appeal – that a mortgage
servicer must establish a separate physical office for responding to QWRs. [Regulation
X § 1024.35(c) and Comments 35(c)-2 and -3. Mack v. ResCap Borrower Claims
Trust, 678 Fed. Appx. 10 (2nd Cir. 2017)]
In another case, the 11th Circuit dismissed the
same argument and held that the servicer’s use of the same address for
additional purposes was irrelevant to RESPA liability. The 11th Circuit noted
that the servicer had subjected itself to the administrative burden of
evaluating and prioritizing a larger quantity of mail to identify QWRs (or NOEs
or RFIs), perhaps to minimize customer confusion, and that to penalize it for
doing so would be perverse. [Bivens v. Bank of America, 868 F.3d 915 (11th Cir.
Aug. 17, 2017)]
Jonathan Foxx
Managing Director
Lenders Compliance Group
