The U.S. District Court for the Middle District of Florida recently granted a mortgage servicer’s motion to dismiss a borrower’s claim that the servicer violated the federal Real Estate Settlement Procedures Act (RESPA) by allegedly failing to respond in a timely or adequate manner to a written Request for Information (“RFI”).

In so ruling, the Court held that the servicer’s conduct did not cause the claimed actual damages incurred in preparing and sending the letters to the servicer, as required by RESPA at 12 U.S.C. § 2605(f). 

The Court also referenced the Supreme Court of the United States’s ruling in Spokeo, Inc. v. Robins, as the borrower’s claims that the servicer did not timely acknowledge and respond to his letters “failed to allege a concrete injury to establish Article III standing.”

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

On Feb. 11, 2016, the borrower’s counsel sent an RFI to the servicer stating that: the borrower was concerned with how the servicer handled a loan modification application; the borrower believed the servicer was improperly assessing certain fees with respect to the loan; the borrower was requesting a full accounting and explanation for all fees charged to the loan; and the borrower was demanding 17 additional items of information. 

On March 4, 2016, the servicer mailed its response to the RFI to the borrower’s counsel. The response explained that it was limited to servicing the borrower’s loan. The response also provided the following: the loan owner’s name and address; a detailed explanation of the fees and expenses charged on the loan; and a payment history. The response also noted the servicer’s internal requests for additional responsive information. 

On March 5, 2016, the servicer sent a number of additional documents to the borrower’s counsel including: a copy of the note and mortgage; copies of broker’s price opinion invoices; and copies of property inspection invoices. 

Although the borrower’s counsel received the servicer’s response to the RFI, the borrower’s counsel nevertheless sent a Notice of Error (“NOE”) to the servicer asserting that counsel did not know if the servicer had received the RFI. The borrower’s counsel then sent a second NOE claiming that the servicer did not “provide all relevant contact information for the owner and/or assignee of this loan.” The borrower’s counsel next sent a third NOE to the servicer following up on the RFI and claiming that the servicer did not provide the documents requested in requests numbers 1-4 and 15- 17. 

The borrower then filed a three count complaint against the servicer in Florida state court alleging that the servicer violated RESPA by: (1) failing to acknowledge receipt of the borrower’s RFI within the five-day time period required by 12 C.F.R. § 1024.36(c), in violation of 12 U.S.C. § 2605(k); (2) failing to provide the contact information for the owner of the borrower’s mortgage loan within the 10-day time period required by 12 C.F.R. § 1024.36(d)(2)(i)(A), in violation of 12 U.S.C. § 2605(k); and (3) failing to adequately respond to the borrower’s RFI as required by 12 C.F.R. § 1024.36(d)(2)(i)(B), in violation of 12 U.S.C. § 2605(k).

The borrower claimed less than $100 in actual damages, attorneys’ fees, and statutory damages under 12 U.S.C. § 2605(f) for an alleged “pattern of disregard” for Regulation X’s requirements.

The servicer timely removed the case to federal court and moved to dismiss. 

The servicer’s motion to dismiss initially asserted that the borrower failed to allege actual damages. The servicer argued that it was only required to respond to requests for information that related to the servicing of the borrower’s loan. Specifically, the servicer argued that it did not have to respond to items that sought information concerning loan modification because those requests did not relate to the servicing of the borrower’s loan.

Further, the servicer argued that it provided the borrower all of the requested information related to loan servicing before the borrower’s counsel mailed the first NOE. As such, the servicer argued that the borrower merely seeks compensation for an alleged violation of a statutory timeliness requirement that did not result in any concrete harm. 

The servicer also argued that the borrower’s claimed injury is not fairly traceable to the servicer’s alleged conduct because the borrower incurred his alleged damages after the servicer provided all the requested information. As such, the servicer argued that the late receipt of any requested information did not cause the borrower’s alleged actual damages because the borrower incurred the postage fee and attorneys’ fees related to preparing and sending the three NOEs after the servicer provided all requested information.

The Court initially observed that to trigger a mortgage servicer’s obligations under RESPA, an RFI must request information “related to the servicing of a loan.” See Hudgins v. Seterus, Inc., 192 F. Supp. 3d 1343, 1348-49 (S.D. Fla. 2016). 

As you may recall under RESPA, “servicing” means “receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan . . . and making the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the loan.” 12 U.S.C. § 2605(i)(3).

Further, “[i]nformation related to loan servicing includes information about the receipt of periodic payments or the amounts of such payments.” Hudgins, 192 F. Supp. 3d at 1349. However, requests regarding loan origination or modification are not requests “related to the servicing of a loan.” See Sirote v. BBVA Compass Bank, 857 F. Supp. 2d 1213, 1221-22 (N.D. Ala. 2010), aff’d, 462 F. App’x 888 (11th Cir. 2012).

The Court next turned to whether the servicer properly responded to the RFI. First, the Court noted that the borrower failed to respond to the servicer’s claim that it adequately responded to the RFI. Instead, the borrower merely alleged in a conclusory fashion that the servicer’s response was inadequate. However, the exhibits attached to the complaint belied the borrower’s allegations. When exhibits attached to a complaint conflict with the complaint’s allegations, the exhibits control. See Crenshaw v. Lister, 556 F.3d 1283, 1292 (11th Cir. 2009) (per curiam). Thus, the Court dismissed the borrower’s claim that the servicer did not adequately respond to the RFI.

The Court next examined the borrower’s claim that the servicer did not respond to the RFI in a timely fashion. The Court observed that the documents attached to the complaint established that the servicer acknowledged the RFI and provided the loan owner’s contact information, albeit not within the time frames Regulation X required

The Court concluded that the borrower failed to state a factual basis for the incurred damages the servicer’s conduct allegedly caused. In doing so, the Court rejected the borrower’s argument that damages caused by sending a subsequent NOE is sufficient to articulate actual damages because there was no need to serve the NOE after the servicer provided a substantive response to the RFI that produced all of the requested information.

Consequently, the Court held, the servicer’s conduct did not cause the claimed damages incurred in preparing and sending the NOEs, as required. See Pimental v. Ocwen Loan Servicing, LLC, 2016 WL 6678523, at *3 (S.D. Fla. Nov. 8, 2016). 

The Court concluded by stating that the Supreme Court of the United States’s reasoning in Spokeo, Inc. v. Robins, ___ U.S. ____, 136 S. Ct. 1540 (2016) as revised (May 24, 2016), bolstered its reasoning. Specifically, applying Spokeo’s analysis here, the borrower’s claims that the servicer did not timely acknowledge and respond to his RFI “failed to allege a concrete injury to establish Article III standing.” 

Accordingly, the Court dismissed the borrower’s remaining claims that the servicer did not acknowledge receipt of the RFI within five days, and did not provide the contact information for the owner of the borrower’s mortgage loan within 10 days, and entered judgment in favor of the servicer on all claims.