QUESTION
We originate and service our loans. When we get a QWR, our team determines how to handle the response.
Recently, we received a QWR from a borrower’s attorney that is causing concern. He claimed that we had confused the borrower in the way we responded. He said our service was “lousy” and felt we had no commitment to “customer satisfaction.”
This attorney letter is being treated as a complaint, and we sent it to our legal department. When we looked at the notes on the loan file, it appears we were courteous, timely, and reasonable. Sometimes, it seems you just can’t win!
However, we want to know how something done right can be construed as done wrong.
How important is customer satisfaction in response to a QWR?
ANSWER
If you monitor servicing processes regularly for appropriate compliance and update them as needed, there will still be such wayward claims from time to time. Customer satisfaction is subjective, but it presents certain evaluative metrics. Perhaps a way to view it is how happy a consumer is with products and services. Determining this likely requires surveys and encouraging customer feedback.
But when you get a complaint, treat it with considerable care. It can fester into all manner of annoying legal and regulatory issues if left unattended. That said, no provision in RESPA requires you to guarantee customer satisfaction!
RESPA and Regulation X require mortgage loan servicers to respond to a mortgage borrower's Request for Information (RFI) and Notice of Error (NOE). This rule results from the Dodd-Frank Act’s expansion of the scope of RESPA’s complaint handling requirements beyond the previously existing Qualified Written Request (QWR) requirements.
RESPA defines a QWR to mean
“… a written correspondence, other
than notice on a payment coupon or other payment medium supplied by the
servicer, that –
(i) includes, or otherwise enables
the servicer to identify, the name and account of the borrower; and
(ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or produces sufficient detail to the servicer regarding other information sought by the borrower.”
In my estimation, the QWR requirements have probably become the most litigated topic in mortgage lending cases filed in the federal courts, with at least 50 reported court decisions in the first 8 months of 2022 and more than 3,600 decisions since 1994. In many cases, the servicer failed to respond in a timely or responsive manner; however, sometimes, the servicer appears to have done almost everything correctly – or, to paraphrase you, they did right but were construed to do wrong.
But claiming lousy customer satisfaction is not a great winning argument. Take the case of Rakestraw v. Nationstar Mortgage, a U.S. Court of Appeals decision for the 11th Circuit.[i] Rakestraw sent Nationstar Mortgage an RFI requesting a complete payment history, a certified copy of the original note, and a signed affidavit from someone in the company stating that the note was an original, not a scanned copy.
Two days later, Nationstar responded with a copy of transaction histories and a copy of the note and security instrument. The response also included a statement that Nationstar could not provide a certified copy of the note and signed affidavit until the loan was paid in full. But it informed Rakestraw of the location of the originals, and gave a name and contact information for more assistance.
Five months passed, and Rakestraw sent another RFI asking for a complete payment history. Four days later, Nationstar responded with a copy of an updated transaction history for the period during which it serviced the loan, along with the transaction history from the previous servicer. The response indicated that some of the transaction history from a previous servicer, which had been provided in response to the first RFI, was difficult to read and suggested Rakestraw directly contact that servicer if she wanted a different version. Nationstar also explained that it could not attest to how funds had been disbursed from escrow by prior servicers.
Rakestraw then sent a third RFI, again seeking a complete transaction history, a certified copy of the original note, and an affidavit attesting to the note’s authenticity. Nationstar responded six days later.
In that same month, Rakestraw sent yet another RFI seeking a complete breakdown and stating that Nationstar had not yet provided detailed accounting information for the loan. Nationstar responded two days later, providing account histories for the entire life of the loan, a code sheet for the servicer’s own transaction history, contact information, and its response to the previous RFI.
Rakestraw sued Nationstar, alleging that it had violated RESPA by “refus[ing] to provide [a] complete and comprehensible account history … and the explanation … of charges and credits” that she had requested in four separate RFIs.
The district court granted summary judgment for Nationstar, finding that its responses had complied with RESPA and that it had “performed a ‘reasonable search’ as required by RESPA” in connection with the borrower’s RFIs relating to a previous servicer.
The court also found that Rakestraw had failed to show:
(1) a material issue as to whether the responses complied with RESPA;
(2) whether Nationstar had conducted a reasonable search regarding records of a prior servicer;
(3) whether Rakestraw had incurred actual damages; and
(4) whether Nationstar’s conduct entitled Rakestraw to statutory damages.
The 11th Circuit affirmed.
The undisputed evidence showed that the responses to the RFIs were not “incomprehensible” for two reasons:
(1) To the extent Rakestraw was struggling to understand the account histories, she kept it to herself until submitting the fourth RFI, at which point Nationstar provided a code sheet, which included the information she requested; and
(2) Rakestraw pointed to nothing in the record showing that the transaction histories actually were “incomprehensible.” According to the court, “[b]orrower satisfaction is not the standard by which we measure a servicer’s response to a request for information, and [the borrower’s] confusion does not equate to a RESPA violation.”
Jonathan Foxx, Ph.D., MBA
Chairman & Managing Director
[i] Rakestraw v.
Nationstar Mortgage, LLC, 2022 U.S. App., 11th Cir. Mar. 4, 2022
