In an unpublished ruling, the U.S. Court of Appeals for the Eleventh Circuit recently held that a mortgage servicer did not violate the federal Real Estate Settlement Procedures Act or its implementing regulation (at 12 C.F.R. § 1024.36(d)(2)(i)(A)) by failing to provide the loan owner’s phone number in response to a borrower’s request for information (“RFI”).

In so ruling, the Court also held that: 

(1) The borrower’s allegation of having expended “certified postage costs of less than $100 for mailing” was not sufficient to meet the requirement of “actual damages” under RESPA at 12 U.S.C. § 2605; and

(2) The borrower’s allegation that the servicer “has shown a pattern of disregard to the requirements imposed upon Defendants by Federal Reserve Regulation X” was not sufficient to meet the requirement of a “pattern or practice of noncompliance” under RESPA at 12 U.S.C. § 2605. 

A copy of the opinion is available at: Link to Opinion. 

A borrower sent an RFI to a servicer requesting the loan owner’s identity and contact information. The servicer responded to the request identifying the loan owner and providing its contact information, but the servicer did not include the loan owner’s phone number. 

The borrower filed suit in state court against the mortgage servicer alleging that the servicer violated RESPA, 12 U.S.C. 2601 et seq., because the servicer did not provide the loan owner’s phone number in response to the RFI and that the servicer demonstrated a pattern of disregard to the requirements Regulation X imposed upon the servicer. The borrower also alleged that he incurred the following actual damages: “certified postage costs of less than $100 for mailing” the RFI along with attorney’s fees and costs. 

The servicer timely removed the matter to federal court, and then moved to dismiss arguing the borrower failed to state a claim. The servicer first argued that Regulation X and RESPA did not require it to provide the loan owner’s phone number in response to the RFI. The servicer also argued that the court should dismiss the claim for failure to allege actual damages or a pattern or practice of noncompliance as required under the relevant provisions of RESPA. 

As you may recall, section 1024.36(d) of Regulation X requires that a servicer must respond:

“Not later than 10 days (excluding legal public holidays, Saturdays, and Sundays) after the servicer receives an information request for the identity of, and address or other relevant contact information for, the owner or assignee of a mortgage loan.” 12 C.F.R. § 1024.36(d)(2)(i)(A).

The trial court observed that whether section 1024.36(d) requires a servicer to provide a loan owner’s phone number in response to an RFI turns on whether “other relevant contact information” includes a phone number.

Although Regulation X and RESPA do not define this phrase, this does not end the inquiry. The trial court analyzed whether the phrase “has a plain and unambiguous meaning with regard to the particular dispute” because “[i]f the statute’s meaning is plain and unambiguous, there is no need for further inquiry.” United States v. Silva, 443 F.3d 795, 797-98 (11th Cir. 2006). This analysis also applies to Regulation X. See, e.g., O’Shannessy v. Doll, 566 F. Supp. 2d 486, 491 (E.D. Va. 2008).

The trial court noted that the regulation requires a servicer to provide “contact information, including a telephone number, for further assistance,” but this “inclusion is conspicuously missing from the applicable provision specifying the information that must be included in response to a request for the identity of the owner or assignee of the loan.” 1024.36(d)(1)(i)-(ii). 

Thus, the trial court held that the plain language of § 1024.36(d) does not require a servicer to provide the phone number for the owner or assignee of a loan. 

The trial court found no contrary legal authority disputing its interpretation. The trial court therefore declined to read a requirement into section 1024.36(d) that servicers must provide the loan owner’s phone number in response to an RFI, and dismissed the borrower’s claim with prejudice. 

The trial court next turned to the servicer’s motion to dismiss the borrower’s statutory damages claim. As you may recall, under RESPA a borrower that proves a section 2605 violation may recover: 

“(A) any actual damages to the borrower as a result of the failure; and

(B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $2,000.” 12 U.S.C. § 2605(f)(1). 

Damages are an essential element of a RESPA claim. Renfroe v. Nationstar Mortgage, LLC, 822 F3d 1241, 1246 (11th Cir. 2016). Moreover, “a plaintiff cannot recover patternor-practice damages in the absence of actual damages.” Id. at 1247 n.4. The trial court recognized that shortly after Renfroe, the Supreme Court of the United States held that standing requires a plaintiff to have “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016). Thus, “[t]o establish an injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’” Id. at 1548 (quoting Lujan v. Defs. Of Wildlife, 504 U.S. 555, 560 (1992)). Further, “Article III standing requires a concrete injury” for a “statutory violation.” Id. at 1549. Here, the borrower did not suffer a “concrete injury in fact.” Thus, the borrower “cannot assert a statutory violation.” The trial court also examined the borrower’s claim that the servicer engaged in a pattern or practice of noncompliance with RESPA. Pattern or practice suggests “a standard or routine way of operating.” McLean v. GMAC Mortgage Corp., 595 F. Supp. 2d 1360, 1365 (S.D. Fla. 2009), aff’d, 398 F. App’x 467 (11th Cir. 2010). Thus, a failure to respond to one or two qualified written requests does not constitute a “pattern or practice.” Id.

Here, the borrower merely alleged that the servicer “has shown a pattern of disregard to the requirements imposed upon Defendants by Federal Reserve Regulation X.” This bare bones and conclusory allegation failed to allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

Thus, the trial court concluded that the borrower’s complaint did not contain enough facts to plausibly allege that the servicer engaged in a pattern or practice of noncompliance with RESPA. 

Accordingly, the trial court dismissed the borrower’s statutory damage claim because the borrower did not suffer a concrete injury in fact, and because the borrower did not sufficiently allege facts to state a claim that the servicer engaged in a pattern or practice of noncompliance with RESPA.

The borrower appealed.

The Eleventh Circuit found no merit in borrower’s claim, and summarily affirmed the trial court’s ruling in favor of the servicer and against the borrower for all the “reasons stated in the District Court’s dispositive order.”