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RESPA Claims Cited by Foreclosure Defendants Fall Flat in Florida

foreclosedHomeowners using the Real Estate Settlement and Procedures Act (RESPA) as a shield to foreclosure saw their claims fall flat in Florida court in recent months.

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.

About Author: Kerri Panchuk

Kerri Panchuk is an attorney and financial writer with more than a decade of experience covering real estate, default servicing, residential mortgage-backed securities, retail, macroeconomics, and commercial real estate. Panchuk graduated from the Southern Methodist University Dedman School of Law and texas Tech University, Panchuk previously served DSNews.com as online managing editor/producer and webcast anchor. In April, she rejoined the Fiver Star Institute as executive director of member groups, overseeing the development and growth of the National Appraisal Congress and Title and Closing Coalition. Panchuk is a member of the State Bar of Texas.

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