At least two cases decided by the United States District Court Southern District of Florida ended with the court siding against the homeowners and for the servicers, giving financial firms a bit more room when interpreting a significant part of RESPA.
Essentially, two cases – Russel v. Nationstar and O’Brien v. Seterus – tested the limits of a provision in RESPA, which requires servicers to respond to all written requests from borrowers who ask for information on their loans, including servicing information and payment schedules.
In Russel v. Nationstar, a borrower facing foreclosure claimed that Nationstar failed to provide a complete profile of the homeowner's loan payment history. This report largely stemmed from the fact that the loan was previously transferred from another servicer. To retrieve the payment history, the borrower filed a series of qualified written requests to the servicer asking multiple times for their complete payment history, which dated back to a previous financial institution.
Because Nationstar did not provide an entire listing of each payment made to the prior servicer, the borrowers claimed their request for information under RESPA had not been met. The court sided with Nationstar, noting that all of the borrower’s responses were met and that the loan had not been delinquent at any time before Nationstar took over the servicing component. Based on the provisions outlined in RESPA, the court sided with the servicer and agreed Nationstar complied with the law by responding to each interrogatory issued by the borrower.
In O’Brien v. Seterus, borrowers claimed that the their rights under RESPA had been denied when the servicer in this case failed to respond in detail to the borrower’s inquiry on why the property facing foreclosure was under the microscope through a series of drive-by inspections. The court sided with Seterus, noting that the servicer sent a 52-page response, including a basic explanation as to why drive-by inspections had taken place.
The takeaway from both cases is that borrowers expecting to use the response requirement highlighted for financial firms in RESPA as a shield are at risk of overreaching – especially when the lender has a complete recording all of its responses and is found in good faith to have responded to the applicable questions.