RESPA is a consumer protection statute that regulates the real estate settlement process, including loan servicing and assignments.
12 U.S.C. § 2601(a). In 2010, RESPA was amended pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010), which, among other things, added provisions governing the way in which federal mortgage loan servicers responded to requests for information (“RFIs”) or assertions of error from borrowers. Dodd-Frank also created the CFPB, which is responsible for promulgating rules and regulations implementing RESPA.
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One such regulation is Regulation X, which went into effect in January 2014.
See Mortgage Servicing Rules Under the Real Estate Settlement Procedures Act, 78 Fed.Reg. 10696, 10696 (Feb. 14, 2013). Section 1024.35 of Regulation X “allows borrowers to notify mortgage servicers of possible account errors.”
12 C.F.R. § 1024.35.
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Loan servicers, then, are required to respond to “any written notice from the borrower that asserts an error and that includes . . . information that enables the servicer to identify the borrower’s mortgage loan account, and the error the borrower believes has occurred.” Id. § 1024.35(a).
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The obligation to respond, though, applies only to the “covered errors” listed in
§ 1024.35(b). This subsection enumerates ten specific covered errors, and then includes an eleventh “catch-all provision,” which encompasses “[a]ny other error relating to the servicing of a borrower’s mortgage loan.”
Id. § 1024.35(b)(11).
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(b)Scope of error resolution. For purposes of this section, the term “error” refers to the following categories of covered errors:
(1) Failure to accept a payment that conforms to the servicer’s written requirements for the borrower to follow in making payments.
(2) Failure to apply an accepted payment to principal, interest, escrow, or other charges under the terms of the mortgage loan and applicable law.
(3) Failure to credit a payment to a borrower’s mortgage loan account as of the date of receipt in violation of 12 CFR 1026.36(c)(1) .
(4) Failure to pay taxes, insurance premiums, or other charges, including charges that the borrower and servicer have voluntarily agreed that the servicer should collect and pay, in a timely manner as required by §1024.34(a), or to refund an escrow account balance as required by §1024.34(b).
(5) Imposition of a fee or charge that the servicer lacks a reasonable basis to impose upon the borrower.
(6) Failure to provide an accurate payoff balance amount upon a borrower’s request in violation of section 12 CFR 1026.36(c)(3) .
(7) Failure to provide accurate information to a borrower regarding loss mitigation options and foreclosure, as required by §1024.39.
(8) Failure to transfer accurately and timely information relating to the servicing of a borrower’s mortgage loan account to a transferee servicer.
(9) Making the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process in violation of §1024.41(f) or (j).
(10) Moving for foreclosure judgment or order of sale, or conducting a foreclosure sale in violation of §1024.41(g) or (j).
(11) Any other error relating to the servicing of a borrower’s mortgage loan.
(c)Contact information for borrowers to assert errors. A servicer may, by written notice provided to a borrower, establish an address that a borrower must use to submit a notice of error in accordance with the procedures in this section. The notice shall include a statement that the borrower must use the established address to assert an error.
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Neil F Garfield, MBA, JD, 75, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business, accounting and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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