A federal appeals court has ruled that a mortgage holder may have violated federal law by failing to respond to written complaints by homeowners concerning the processing of their mortgage payments. The Seventh Circuit reversed a summary judgment that had been entered by the trial court. The Plaintiffs executed a 30-year mortgage when they purchased their home. The original mortgage holder failed to correctly apply the Plaintiffs’ monthly payments and threatened foreclosure.
Before that dispute was resolved, the Plaintiffs’ mortgage was assigned to GMAC Mortgage Corporation. When the Plaintiffs’ problems with the processing of their mortgage payments continued, they sued GMAC under the Real Estate Settlement Procedures Act. The Plaintiffs alleged that GMAC violated the Act by failing to provide them proper notice of the transfer of their mortgage and by failing to respond “promptly” to their “written requests for information” about their loan. GMAC claimed it was protected under the Act’s “safe harbor” provision because it corrected errors within 60 days of discovering them and before the Plaintiffs filed their lawsuit.
But the Appeals Court concluded that GMAC was not eligible for the safe harbor because it failed to “notif[y] the person concerned of the error” as required by the statute. The Court further decided that certain letters sent by the Plaintiffs were “qualified written requests” triggering GMAC’s statutory duty to make a prompt response. In reaching this conclusion, the Court rejected GMAC’s contention that the Plaintiffs’ correspondence lacked sufficient specificity. In its opinion, the Court wrote:
Any reasonably stated written request for account information can be a qualified written request. To the extent that a borrower is able to provide reasons for a belief that the account is in error, the borrower should provide them, but any request for information made with sufficient detail is enough under RESPA to be a qualified written request and thus to trigger the servicer’s obligations to respond.
The moral of this story is that banks must follow the law and must treat borrowers fairly. It’s good to see courts holding banks to that standard.
Source: Lawyers USA Online
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