Sunday, October 23, 2011
HOMEOWNERS CAN BENEFIT FROM BANK SERVICER VIOLATIONS OF QUALIFIED WRITTEN REQUESTS UNDER RESPA & TILA
There may be gold in the hands of distress homeowners if their bank servicers' fail to promptly comply with QWR and TILA requests. Homeowners can sue their servicers in Small Claims Courts for violations of the Dodd-Frank Financial Reform Act. Banks could end up paying $2,000 for RESPA time violations and $4,000 for TILA time violations. As banks never respond adequately to QWRs, borrowers could sue for each violation -- and the money could add up to as much as $6,000 per QWR. Just imagine -- it could cost the banks plenty. This could be the new version of "Make Banks Pay."
If you as a borrower are facing foreclosure, it is increasingly ciritical to determine who owns the mortgage and whether or not the entity taking action is in fact the actual creditor or actual owner of the Note secured by the mortgage or deed of trust. Most of the time the actual owner is not the same entity as the mortgage servicer (the company that collects payments and sends out monthly statements. To find out more about finding out who owns the mortgage note see "How to Find the Owner of the Mortgage Note" published on-line by the Law Office of Richard Shepherd.
Effect of Dodd-Frank Financial Reform Act, Public Law 111-203, Section 1463
Section 1463 of the Dodd-Frank Financial Reform Act reduces Qualified Written Request (QWR) deadlines and requires that the bank servicer acknowledge receipt of a QWR within 5 business days and must give a substantive response within 30 business days, with a possible 15 day extension of the servicer sends notice of the delay and its reason.
This law adds new 6 (k) to RESPA stipulating that the servicer "shall not fail to respond within 10 business days to a request by the borrower to provide the identity, address, and other relevant information about the owner or assignee of a home mortgage loan."
It further address the lack of a specific time deadline in TILA Section 1642(f)(2) by providing that it shall be a violation of TILA for a servicer to fail to identify the "owner or assignee" of a loan within 10 business days following a written request with respect to a loan secured by the borrower's principal dwelling.
TILA Section 1641(f)(2) applies only to loans secured by the borrower's Principal Dwelling. RESPA's QWR rules apply too practically any loan secured by a one to four family residential structure, regardless of who occupies it.
Penalties for Violations: Violations of RESPA QWR rules make the servicer liable for statutory damages of $2,000 under the Dodd-Frank Reform Act in the even the Court finds a "pattern or practice" of non-compliance. Violations of TILA Section 1641(f)(2) make the "creditor" liable for statutory damages up to $4,000, plus actual damages and attorney fees.
Effective Date: All sections of Dodd-Frank were effective July 22, 2010 unless "otherwise provided" or regulations are necessary in order to implement such section. See Dodd-Frank Section 1400. Because no regulations appear to be required to implement the particular provisions mentioned above, there is a reasonable argument that these particular provisions became effective July 22, 2010 though most industry lawyers will probably disagree with this interpretation.
Sample QWR Letter:
By Certified US Mail # (send certified to servicer, return receipt)
Servicer Name & Address (can be found on the back of your mortgage statement)
RE: Loan Number with Borrower's name and address of the property
This is a Qualified Written Request as defined by the Real Estate Settlement Procedures Act (“RESPA”) for information regarding the servicing of this mortgage loan. This is also a request made pursuant to §1641(f)(2) of the Truth in Lending Act (“TILA”) for the name, address and telephone number of the owner of the mortgage Note the evidences this debt obligation.
Based on information I have received about this loan in monthly statements, I am uncertain as to who is the current owner of the mortgage Note. Please resolve this uncertainty and dispute by providing me with the following information:
1. 1. Please provide the complete name and address of the entity that currently owns the Note that is secured by this mortgage loan.
2. 2. Please provide a copy of the front and back of all pages of that Note.
3. 3. Please provide copies of all Endorsements of that Note.
4. 4. Please provide a copy of all Allonges to that Note.
5. 5. Please provide a copy of all Assignments of the Deed of Trust securing this Note.