The United States Court of Appeals for the Eighth Circuit recently reversed a district court and held that a borrower failed to prove he suffered damages caused by the servicer’s violation of the Real Estate Settlement Procedures Act (“RESPA”) and, as such, failed to establish an essential element of the claim. See Wirtz v. Specialized Loan Servicing, LLC, 886 F.3d 713 (8th Cir. 2018). There, the borrower received a mortgage loan in 2001 and the defendant servicer was assigned the servicing of the loan in 2013. As part of the assignment, the prior servicer transferred records dating back to June 2011, but no further. These records indicated that the borrower was one month behind on his payments as of June 2011, although they did not show when that missed payment occurred. The records also showed that the borrower missed another payment between June 2011 and the 2013 assignment. After receiving these records, the servicer sent a letter to the borrower stating that payments were past due. The borrower responded by contacting both the servicer and the state attorney general and disputing that he was delinquent, and his attorney sent a series of qualified written requests to the servicer. Although the servicer responded to these requests and showed its basis for the missing payment between 2011 and 2013, it did not produce any evidence of the pre-June 2011 missed payment and informed the borrower that he needed to obtain the relevant records himself to prove that the loan was not delinquent as of June 2011. The borrower then brought this action, alleging RESPA violations against the servicer for its failure to properly investigate the qualified written request. The district court granted the borrower’s motion for summary judgment and held that the servicer failed to conduct a sufficient investigation of the pre-June 2011 delinquency. It then found that the borrower had suffered $80 in actual damages for having to obtain his bank records from 2012 and 2013, and that the servicer’s actions constituted a pattern or practice of noncompliance justifying $2,000 in statutory damages as well as attorneys’ fees and costs, totaling over $50,000.

On appeal, the Court reversed. The Court first agreed that the servicer had failed to conduct a reasonable investigation of the earlier default, which is required under RESPA. The servicer was required to seek the prior records, and could not simply state that it did not receive them at the time of the assignment. Nonetheless, the Court found that the borrower had failed to prove that he suffered any damages as a result of the violation. The alleged actual damages were based on the cost of the borrower obtaining his 2012 and 2013 records to dispute the servicer’s claim that the borrower missed a payment during this period. The RESPA violation, however, was based on the servicer’s perfunctory investigation of the pre-June 2011 missed payment, and the borrower did not allege any actual damages relating to this missed payment. Thus, the borrower was not entitled to any actual damages.

Additionally, the Court reversed the award of additional statutory damages for two reasons. First, the borrower would only be entitled to “additional” statutory damages under RESPA if he was first awarded actual damages. Second, even if it were possible for a court to award the additional damages without actual damages, a borrower is only entitled to additional statutory damages if there is a pattern or practice of noncompliance, and “[a] borrower cannot manufacture a pattern or practice by sending multiple requests in quick succession involving the same subject matter.” Accordingly, “[b]ecause [the borrower] did not present evidence of damages resulting from [the servicer’s] failures to comply with RESPA, he failed to establish an essential element of his claim under RESPA” and the district court’s decision was reversed.