Pursuant to the “Real Estate Settlement Procedures Act” (“RESPA”), the Consumer Financial Protection Bureau (“CFPB”) (formed under the authority of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010) instituted new regulations which provide borrowers (in most cases, homeowners) with certain rights regarding the servicing of mortgage loans taken out against their homes. If a mortgage loan servicer fails to comply with these regulations, the servicer in certain cases can be liable to the borrower for monetary damages. The servicer can also be responsible for paying the borrower’s attorney’s fees.
Some typical RESPA violations that a borrower may assert against a mortgage loan servicer include:
- Failure to make timely payments out of the borrower’s escrow account
- Failure to a provide the borrower with a transfer of servicing statement and 60-day payment safe harbor
- Failure to timely and adequately respond to a borrower’s “Notice of Error” or “Request for Information” (otherwise known as “Qualified Written Requests”)
- Failure to respond to a borrower’s request for the identity of the mortgage owner
- Failure to comply with early intervention requirements when the borrower falls behind with their mortgage payments
- Failure to comply with “loss mitigation” procedures, including procedures related to a possible “loan modification”
- Obtaining and charging the borrower for force-placed insurance on the property without a reasonable basis for doing so
Under RESPA, if a mortgage loan servicer is found to have violated applicable regulations, it can be responsible for paying the borrower money in compensation for actual damages, plus attorney’s fees.