You are on page 1of 24

Chapter 12

Memo for Partial Summary Judgment Against Mortgage Servicer for Failing to Respond to Written Requests Indicating Billing Errors

Dale Pittman maintains a consumer protection litigation practice based in Petersburg, Virginia. In addition to an emphasis on representing consumer debtors under the Fair Debt Collections Practices Act, he represents consumers in credit reporting abuse, predatory lending, automobile fraud, mobile home fraud, and home improvement fraud matters. Opinions from some of his FDCPA cases appear at Creighton v. Emporia Credit Service, Inc., 981 F. Supp. 411 (E.D. Va. 1997); Withers v. Eveland, 988 F. Supp. 942 (E.D. Va. 1997); Morgan v. Credit Adjustment Board, 999 F. Supp. 803 (E.D.Va. 1998); and Talbott v. GC Services Limited Partnership, 53 F. Supp. 2d 846 (W.D. Va. 1999). Courts in North Carolina and Virginia have certified class actions against collection agencies in cases in which Mr. Pittman represented classes of consumers, including Woodard v. Online Information Servs., 191 F.R.D. 502 (E.D.N.C., Jan. 19, 2000); and Talbott v. GC Services Limited Partnership, 191 F.R.D. 99 (W.D. Va. 2000). This chapter contains a memorandum in support of partial summary judgment against a mortgage servicing company for failing to respond the qualified written requests pointing out its repeated billing errors. The Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2605(e)(2) requires a mortgagors and their servicers to investigate and respond to qualified written requests for correction of errors.1 The mortgage servicing company erroneously demanded the homeowners maintain homeowners insurance on their second home when the companys mortgage was on the first home. The homeowners pointed out the mistake and provided proof of insurance on the mortgaged home. Rather than correcting the error the mortgage servicing company forced placed insurance on the second home which was the billing address but not collateral for the mortgage and added over $1000 each year for two years for forced placed insurance to the mortgage account. The homeowners repeatedly wrote protesting the error as did several attorneys on their behalf, to little avail. National Consumer Law Centers 10 Consumer Law Pleadings on CD-Rom Ch.7 (2004) contains a complaint for these claims.

National Consumer Law Center, Repossessions and Foreclosures 19.2 (5th Ed. 2002).

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA Richmond Division [CONSUMER 1], and [CONSUMER 2], Plaintiffs, Civil Action No. No. CHASE MANHATTAN MORTGAGE CORPORATION, Defendant. MEMORANDUM IN SUPPORT OF PLAINTIFF [CONSUMER 1]S MOTION FOR PARTIAL SUMMARY JUDGMENT I. INTRODUCTION This case is about a home mortgage lender that, due to its own bungled recordkeeping, and its unwillingness to correct the records it knew to be wrong, put the Plaintiffs home mortgage loan into a delinquency and foreclosure status despite the fact that the Plaintiffs paid faithfully on their loan. Chase ignored the Plaintiffs repeated attempts to explain and document to Chase that Chase had made a huge error and that it should not have put the Plaintiffs loan in a delinquency or foreclosure status. Chase failed to respond appropriately to Qualified Written Requests, and Chase failed to take corrective action with respect to the servicing of the mortgage loan. Plaintiffs Complaint is filed under the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2601 et. seq., to recover actual, statutory, and punitive damages, court costs, and attorneys fees by reason of Chases violations of 12 U.S.C. 2605. Plaintiffs also assert claims predicated upon Defendants defamation, its conversion of the Plaintiffs loan payments, and its negligence.

Plaintiff [Consumer 1] moves for partial summary judgment against Defendant based on its violations of RESPAs requirements imposing duties on loan servicers to respond to borrower inquiries.2 II. LISTING OF UNDISPUTED FACTS In accordance with Local Rule 56 (B), [Consumer 1] submits the following listing of material facts as to which he contends there is no genuine issue. 1. Plaintiff [Consumer 1] is a natural persons who resides in [City 2]. Complaint,

Para. 3. Answer, Para. 3. 2. Defendant Chase Manhattan Mortgage Corporation is a foreign corporation doing

business in the State of Virginia. Complaint, Para. 4. Answer, Para. 4. 3. Chase makes and services numerous loans which are "federally related mortgage

loans" as defined in 12 U.S.C. 2602, in that they are secured by a lien on residential real property designed principally for the occupancy of from one to four families, and in that they are made by "creditors" which make or invest in residential real estate loans aggregating more than $1,000,000 per year. Complaint, Para. 4. Answer, Para. 4. 4. 5. The [Consumer] loan is one such loan. Complaint, Para. 4. Answer, Para. 4. On May 31, 1996, [Consumer 1] and his wife, Plaintiff [Consumer 2], closed on a

residential real estate loan on their home in [City 1]. Copies of the Note, Truth in Lending disclosures, and Deed of Trust, as to which Plaintiff [Consumer 2] signed as a borrower securing payment of the Note, are attached to the Complaint as Exhibits A, B, and C, respectively. Complaint, Para. 6. Answer, Para. 6.

Because Chase has raised in discovery what it contends to be a question of material fact as to whether or not Plaintiff [Consumer 2] is a borrower entitled to the RESPA dispute resolution protections, only Plaintiff [Consumer 1] seeks partial summary judgment at this time. 3

6.

The lender under the Note and the Beneficiary under the Deed of Trust was

Chemical Bank, N.A., whose address was C/O Chase Financial Corporation, 250 West Huron, Cleveland, Ohio 44113-1451. Complaint, Para. 7. Answer, Para. 7. 7. Monthly payments under the Note were to be made at C/O Chase Financial

Management Corporation, P.O. Box 91958, Cleveland, Ohio 44101. See Exhibit A, 4.(A), attached to the Complaint. Complaint, Para. 8. Answer, Para. 8. 8. 9. 9. [Consumer 1 and Consumer 2] began faithfully making payments to Chase on The first payment was due on June 30, 1996. Complaint, Para. 9. Answer, Para.

their home loan. Complaint, Para. 9. Although Chase denies this, Answer, Para. 9, it has produced in discovery a partial account history ledger that shows that the [Consumers] did begin faithfully making their loan payments. See Plaintiffs Exhibit 1, Chases Bates Nos. 266 and 267. 10. 11. Thereafter, the [Consumers] moved to [City 2]. Complaint, Para. 10. [Consumer 1 and Consumer 2] notified Chase of a change in their billing address,

by changing the address on the March, 1999 billing statement that they received from Chase and returning it with their March payment. Complaint, Para. 10. 12. The [Consumers] property address in [City 1] is: [Address 1] (the [City 1]

property). Complaint, Para. 11. Answer, Para. 11. 13. The [Consumers] address in [City 2] is: [Address 2] (the [City 2] property).

Complaint, Para. 12. Answer, Para. 12.

14.

When [Consumer 1 and Consumer 2] moved to [City 2], they kept their property

in [City 1], and they continued making the loan payments to Chase. Complaint, Para. 13. Answer, Para. 13. 15. When [Consumer 1 and Consumer 2] moved to [City 2], they financed their

purchase of a home in [City 2] through another lender, Bank of America. Complaint, Para. 14. Answer, Para. 14. 16. Chase had nothing whatsoever to do with the loan on the [Consumers] home in

[City 2]. Complaint, Para. 14. Answer, Para. 14. 17. The [City 2] property was not subject to a loan with Chase, and it was not subject

to Chases Deed of Trust on [Consumer 1 and Consumer 2]s property in [City 1]. Complaint, Para. 14. Answer, Para. 14. 18. Thereafter, Chase sent [Consumer 1] a letter dated April 13, 1999, notifying

[Consumer 1] that Chase, In a continuing effort to provide a superior level of service, was transferring the servicing on his loan to Chases Columbus, Ohio Servicing Center, effective April 23, 1999. A true copy of Chases letter is attached to the Complaint, marked Exhibit D. Complaint, Para. 15. Answer, Para. 15. 19. The letter also stated that one change resulting from the transfer of servicing was

that the old loan number on the loan, [Loan no. 1], was being changed, and that the new loan number would be [Loan no. 2]. Complaint, Para. 15. Answer, Para. 15. 20. At some point in time, Chase changed its records so as to show that [Consumer

1]s loan was on the [City 2] property. Complaint, Para. 17. 21. This was not true, because Chase did not have a loan with [Consumer 1] on the

[City 2] property. Complaint, Para. 17.

22.

Chases records changed as the result of a loan serving record keeping error on

the part of Chase. Complaint, Para. 17. Although Chase denies this, Answer, Para. 17, its own records produced with its Rule 26(a) disclosures show that Chase had, and knew that it had, a loan servicing record keeping error. See, e.g. Plaintiffs Exhibit 2, Chases Bates Nos. 3 and 4 from Chase Manhattan Mortgage Corporation Customer Service Reports, stating, among other things, on Bates No. 3 property add in system is not correct. address is at [Address 1]. This info can be verified if needed on the Uniform Residential Appraisal Report in the IFO Workbench. Our lien is on the wrong property, please fix. . . . and, on Bates No. 4, Received documents from records center. The address listed on deed of trust is [Address 1], however, it appears this problem has been an issue for several months. 23. As a result of its loan servicing recordkeeping error, Chase demanded that

[Consumer 1] provide Chase with proof of insurance on the [City 2] property, mistakenly claiming to the [Consumers] that Chase was their lender for the [City 2] property. Complaint, Para. 18. 24. [Consumer 1 and Consumer 2] told Chase that Chase had a copy of the

[Consumers] policy of insurance on the [City 1] property and that Chase did not have a loan on the [City 2] property. The [Consumers] sent Chase a copy of the [Consumers] policy of insurance on the [City 1] property. Complaint, Para. 19. A copy of the [Consumers] insurance policy on the [City 1] property for the policy period April 22, 1999, to April 22, 2000, is attached to the Complaint as Exhibit E. 25. Chase sent [Consumer 1] a letter dated June 3, 1999, demanding evidence that the

[Consumers] property, mistakenly referring to the [City 2] property, was covered by the

required homeowners insurance. Complaint, Para. 20. Answer, Para. 20. A copy of Chases letter is attached to the Complaint as Exhibit F. 26. Chase kept calling the [Consumers] for about a year demanding that [Consumer 1

and Consumer 2] provide proof of insurance on the [City 2] property, and the [Consumers] kept telling Chase that Chase did not have a loan on the [City 2] property, that the [Consumers] had homeowners insurance on their home in [City 1], and that Chase had nothing to do with the [City 2] property. Complaint, Para. 21. Although Chase denies this, Answer, Para. 21. Chase has produced documents replete with Chases own internal record keeping entries proving that the truth of these allegations is not in dispute. See, e.g., the attached: A. Plaintiffs Exhibit 3, Bates No. 54, stating that one of the Plaintiffs SD THAT

CHASE STARTED AN ESCROW ACCOUNT AND WE CHANGED THE PROPERTY ADDRESS TO THE BILLING ADDRESS. B. Plaintiffs Exhibit 4, Bates No. 53, acknowledging that ISSUES ON ACCT INS

AND TAX PD BY CHASE MAY BE ON THE WRONG PROPERTY. 27. Chase nevertheless took out, or force placed, insurance on the [City 2] property

for a term beginning April, 2000, for a premium payment of $1,035.00. Chase force placed another policy of insurance on the [City 2] property for a term beginning April, 2001, again for a payment of $1,035.00. Copies of the insurance policies that Chase force placed on the [City 2] property are attached to the Complaint, marked Exhibits G and H, respectively. Complaint, Para. 22. Although Chase denies this, Answer, Para. 22, it has produced copies of the force placed insurance policy on the [City 2] property, showing the new loan number, [Loan no. 2], that Chase assigned to the loan when it transferred servicing of the loan to Chases Columbus servicing center, as Bates Nos. 165 and 166 in response to the [Consumers] Request for

Production, copies of which are attached hereto as Plaintiffs Exhibit 5. There was no escrow account feature as to this loan from its inception, because the [Consumers] loan payments did not include escrowed money for payment by Chase of insurance and taxes. Chases payment history ledger on the subject loan shows that Chase opened an escrow account on March 15, 2000, and then posted a $1,035.00 charge to escrow for Hazard Insurance. Plaintiffs Exhibit 6, Chases Bates No. 8. 28. Chase sent [Consumer 1] an unsigned, computer generated letter dated July 3,

2000, again mistakenly referring to the [City 2] property as the Property Location of the subject loan, and stating that, during a recent audit of its files, it came to Chases attention that it did not have current hazard insurance information for the account. A copy of Chases letter is attached to the Complaint as Exhibit I. Complaint, Para. 23. Answer, Para. 23. 29. Chase sent [Consumer 1] an unsigned, computer generated NOTICE OF

PLACEMENT OF INSURANCE dated August 4, 2000, inaccurately referring to the [City 2] property as the Property Location of the subject loan, stating that Chase had force placed insurance on the [City 2] property, and that Chase would increase the monthly mortgage payments and set up an escrow account from which to make insurance payments on the [City 2] property. A copy of Chases notice is attached to the Complaint as Exhibit J. Complaint, Para. 24. Answer, Para. 24. 30. Chase sent [Consumer 1] another unsigned, computer generated NOTICE OF

PLACEMENT OF INSURANCE, dated April 27, 2001, a copy of which is attached to the Complaint as Exhibit K. Complaint, Para. 25. Answer, Para. 25. 31. Chase sent [Consumer 1] ACCELERATION WARNINGS dated August 2, 2001,

and August 31, 2001, falsely stating that the loan was in default. Copies of Chases

ACCELERATION WARNINGS are attached to the Complaint as Exhibits L and M. Complaint, Para. 26. Answer, Para. 26. 32. Chase sent [Consumer 1] another unsigned, computer generated letter, dated

August 20, 2001, inaccurately referring to the [City 2] property as the Property Location of the subject loan, again stating that, during a recent audit of its files, it came to Chases attention that it did not have current hazard insurance information for the [Consumer 1]s account. A copy of Chases letter is attached as Exhibit N. Complaint, Para. 27. Answer, Para. 27. 33. Chases own internal Collection History Inquiry records show that six days before

Chases computer system sent this letter to [Consumer 1], on August 14, 2001, [Consumer 2] told a Chase telephone collector, [Telephone collector], that CHASE IS CHARGING HER FOR INS IN THE AMT OF $3360.70 WITH THE WRONG ADDRESS LISTED @ [Address 2], [City 2] ADDRESS SD THT LOAN IS W ANOTHR BANK. See Plaintiffs Exhibit 7, Chases Bates No. 52. 34. Until Chase began assessing the [City 1] loan account with charges for more

expensive ($1,035.00 per annual policy period, compared to the $431.00 per annual policy period that the [Consumers] paid for the hazard insurance that they took out on their property) force placed insurance premiums on the [City 2] property in which Chase had no interest, the [Consumers] maintained at their own expense a policy of insurance on the property in [City 1], which was the subject of the loan with Chase. A copy of the July 20, 2001 through July 20, 2002 policy is attached to the Complaint as Exhibit O. Complaint, Para. 28. Answer, Para. 28. 35. The [Consumers] continued making the loan payments called for under the

subject loan, while at the same time responding whenever Chase called demanding proof of insurance on the [City 2] property, attempting to explain to Chase that Chase did not have a loan

on the [City 2] property, and that the [Consumers] had insurance on the [City 1] property that was the subject of the loan with Chase. Complaint, Para. 29. Although Chase denies these allegations, Answer, Para. 29, the documents that it has produced clearly show that there is no genuine issue as to this fact. See, e.g., Plaintiffs Exhibit 8, Chases Collection History Inquiry notes, Bates No. 47, showing that MKR CCLD W/ A REPT ON LINE FROM BANK OF AMERICAN, STATING THY HOLD FIRST LIEN POSITION ON THE PROPERTY LISTED IN [City 2], SO PROPERTY LIEN SHLD BE ON THE [City 1] PROPERTY ADDRESS. See also, Plaintiffs Exhibit 9, Chases Collection History Inquiry Note, Bates No. 39, acknowledging its error and purporting to begin the process of fixing it: STRTD ROUTE TO HY ADD CHND ON SYS, OUR LIEN IS ON THE WRONG PROPERTY. (Emphasis added.) 36. Chase generated a letter dated September 13, 2001, to [Consumer 1], stating that

it had no documentation to support the [Consumers] dispute and that it could not complete its research until it had both the note and the title for this loan. A copy of this letter is attached to the Complaint as Exhibit P. Complaint, Para. 30. Answer, Para. 30. 37. Although Chase stated in the September 13, 2001 letter that it is unable to

complete the research until we have both the note and title for this loan, Chase had in its records and possession the entire closing file on the loan. This was a Chase loan from inception, and Chase, of course, had the entire closing file in its records. It had everything it needed to verify the correctness of the [Consumers] dispute and to complete the research. Attached as Plaintiffs Exhibit 10 are the Note (Bates No. 64-67), the Second Mortgage Rider to the Deed of Trust (Bates No. 68-72), and the Deed of Trust (Bates No. 73-77), all of which were in fact in Chases records at its own Records Center.

10

38.

By letter dated October 1, 2001, Chase wrote an unsigned, computer generated

Dear Borrower letter to [Consumer 1], again inaccurately referring to the [City 2] property as the Property Address of the subject loan, thanking [Consumer 1] for providing evidence of hazard insurance, saying that Chase had updated its records, and that any coverage had been cancelled without charge to your account. A copy of Chases letter is attached to the Complaint as Exhibit Q. Complaint, Para. 31. Answer, Para. 31. 39. Thereafter, Chase nevertheless continued to penalize [Consumer 1 and Consumer

2] for Chases own inability to maintain correct loan records. Complaint, Para. 32. Although Chase denies this, Answer, Para. 32, its records include a January 16, 2002 Collection History Inquiry in which one Chase account handler forwards information to another account handler who WILL SEE IF CAN GT ACCT CREDITED FOR AMNT OF $ WE PUT IN ESCROW FOR INSURANCE WE PLACED ON ACCT FOR WRNG PROP ADDRESS. Plaintiffs Exhibit 11, Chases Bates No. 35. 40. Chases collectors continued to call, and the [Consumers] continued to explain

that they were neither in default nor out of compliance with the terms of their loan with Chase, and that Chases records were and continued to be wrong and needed correcting. Complaint, Para. 33. 41. Chase continued to spit out dunning letters, acceleration warnings, notices of

default, and form letters acknowledging [Consumer 1]s contacts regarding the subject loan, including, but not limited to, the following: A. 2/15/02, dunning letter for the allegedly past due principal, interest, fees

and late charges (Exhibit R to the Complaint); B. 3/3/02 ACCELERATION WARNING (Exhibit S to the Complaint);

11

C. D.

4/2/02 ACCELERATION WARNING (Exhibit T to the Complaint); 4/7/02 NOTICE OF DEFAULTED MORTGAGE (Exhibit U to the

Complaint) (Exhibits R through U are all unsigned, computer generated form documents); E. F. 5/8/02 dunning letter (Exhibit V to the Complaint); 5/23/02 form letter acknowledging the [Consumers] contact and

promising confirmation as soon as this situation has been resolved. (Exhibit W to the Complaint); G. June 14, 2002 letter stating that it completed its research and referring the

[Consumers] to a purportedly attached enclosure that includes an itemized listing of how Chase applied the funds to your loan. (Exhibit X to the Complaint) There was nothing enclosed with this letter; and H. 9/19/02 dunning letter demanding payment for purportedly past due

payments and unspecified fees due on this account!!! (Emphasis in original.) (Exhibit Y to the Complaint). Complaint, Para. 34. Answer, Para. 34. 42. From the beginning of this loan, Chase accepted payment by personal check.

Complaint, Para. 35. 43. However, Chase sent back the payment due December 30, 2001, and demanded

that payment be made by certified check. Thereafter, Plaintiffs began sending payments to Chase by certified check. Complaint, Para. 35. 44. Because their efforts at getting Chase to rectify its mistake were not working,

because Chase was refusing to accept their loan payments, and because Chase was threatening to

12

foreclose on their property without any legitimate basis, the [Consumers] went to see a lawyer, [Lawyer], Esquire, of [Address]. Complaint, Para. 36. 45. On March 27, 2002, [Lawyer] wrote to Chase in response to the March 3, 2002

ACCELERATION WARNING, a copy of which is attached to the Complaint as Exhibit Z, disputing Chases claim that the [Consumers] were in default on their loan and setting forth in detail the [Consumers] faithful payment of their loan payments, Chases improper forced placement of insurance on the [City 2] property, and requesting that Chase provide a statement of the separate amounts which Chase contends are unpaid with respect to principal, interest, escrow, late charges, and fees. [Lawyer]s letter to Chase was one of various RESPA Qualified Written Requests sent on behalf of [Consumer 1 and Consumer 2]. Complaint, Para. 37. A copy of [Lawyer]s March 27, 2002 letter is attached hereto, marked Plaintiffs Exhibit 12 . Complaint, Para. 37. Answer, Para. 37. 46. Chase received [Lawyer]s letter on March 30, 2002, as shown by the Certified

Mail Receipt attached as Plaintiffs Exhibit 13. 47. Chase did not provide a written response acknowledging receipt of the

correspondence within 20 days of receiving [Lawyer]s March 27, 2002 letter. 48. [Lawyer] sent Chase additional letters, dated April 12, 2002, and May 14, 2002,

copies of which are attached hereto, marked Plaintiffs Exhibits 14 and 15, respectively. 49. Chase did not provide a written response acknowledging receipt of the

correspondence within 20 days of receiving [Lawyer]s May 14, 2002 letter. 50. Chase did not make appropriate corrections in the [Consumers] account,

including the crediting of any late charges or penalties, despite [Lawyer]s detailed Qualified Written Requests setting forth Chases mistakes in servicing the loan.

13

51.

Chase retained the services of the [Law Firm], law firm to foreclose on the

subject loan. [Substitute trustee] (the Substitute Trustee) of that law firm acted as Substitute Trustee. Complaint, Para. 38. Answer, Para. 38. 52. On November 12, 2002, the Substitute Trustee sent foreclosure notice papers to

[Consumer 1 and Consumer 2], copies of which are attached to the Complaint as Exhibit aa. Complaint, Para. 39. Answer, Para. 39. 53. Among other things, the Substitute Trustees cover letter to [Consumer 1 and

Consumer 2] that accompanied the foreclosure papers stated that the original Note evidencing your indebtedness has been either lost, misplaced, or destroyed, and is unavailable. Complaint, Para. 40. Answer, Para. 40. 54. This was a false statement. Chase had the Note at its Monroe, Louisiana Records

Center, and it produced a copy of with its Rule 26(a) disclosures. 55. Through the Substitute Trustee, Chase published a LEGAL NOTICE TRUSTEE

SALE in the [Newspaper]. A copy of the notice that ran on November 27, 2002 is attached to the Complaint as Exhibit bb. Complaint, Para. 41. Answer, Para. 41. 56. Through the Substitute Trustee, Chase scheduled the sale of the [Consumers]

property for December 11, 2002, at 9:00 a.m., at the front door of the [County Courthouse]. Complaint, Para. 42. Answer, Para. 42. 57. In an attempt to prevent the sale of their property, [Consumer 1 and Consumer 2]

retained the services of another lawyer, [Lawyer 2], Esquire, of [address]. Complaint, Para. 43. 58. On November 22, 2002, [Lawyer 2] wrote to Chase (Exhibit cc to the Complaint)

and to the Substitute Trustee (Exhibit dd to the Complaint), advising both that Chases foreclosure was the result of serious administrative error on the part of Chase, and that Chase

14

had insured [Consumer 1 and Consumer 2]s [City 2] property, as to which Chase has no security interest, causing an increase in the [Consumers] payments and creating the alleged default. [Lawyer 2]s letters were RESPA Qualified Written Requests sent to Chase on behalf of the [Consumers]. Complaint, Para. 44. Answer, Para. 44. 59. After [Lawyer 2]s contacted the Substitute Trustees office, the foreclosure sale

was reset for January 14, 2003. Complaint, Para. 45. Answer, Para. 45. 60. [Lawyer 2] sent a December 4, 2002 letter (Exhibit ee to the Complaint) to the

Substitute Trustee, setting forth the reasons why Chase had no reason to sell the [City 1] property, inter alia, that Chase secured insurance on [Consumer 1 and Consumer 2]s dwelling in [City 2], which dwelling and property is not connected to the [City 1] property that is the subject of Chases loan, and that the [Consumers] had made every payment that they were supposed to make to Chase. Complaint, Para. 46. Answer, Para. 46. 61. In response to [Lawyer 2]s December 4, 2002 letter, the Substitute Trustee sent

[Lawyer 2] a letter dated December 11, 2002, advising that he had provided Chase with a copy of [Lawyer 2]s December 4, 2002 letter, and that the January 14, 2003 foreclosure sale would not occur unless the loan is not reinstated by the mortgagors, and demanding a current reinstatement amount for this loan of $3,774.44. (Exhibit ff to the Complaint.) Complaint, Para. 47. Answer, Para. 47. 62. Thereafter, in response to [Lawyer 2]s December 16, 2002, faxed letter to the

Substitute Trustee (Exhibit gg to the Complaint) protesting the inclusion of late fees in the reinstatement amount, the Substitute Trustee, by fax dated December 17, 2002, gave [Lawyer 2] a reinstatement figure that included $113.46 in charges for six late charges, and $1,014.00 for attorneys fees and costs. (Exhibit hh to the Complaint). Complaint, Para. 48. Answer, Para. 48.

15

63.

In response, [Lawyer 2] sent a December 17, 2002 fax memo to the Substitute

Trustee, among other things, protesting the inclusion in the reinstatement figure $113.46 in charges for six late charges, and $1,014.00 for attorneys fees and costs. (Exhibit ii to the Complaint.) Complaint, Para. 49. Answer, Para. 49. 64. The Substitute Trustee responded with a December 19, 2002 fax memo to

[Lawyer 2] stating that Chase would waive all fees and costs of the foreclosure and the late charges. However, on January 22, 2003, the Substitute Trustee faxed to the [Consumers] undersigned counsel a payoff quote that included a claimed unpaid principal amount of $27,175.94, interest through January 31, 2003 of $1,738.80, $151.28 in late charges, $59.50 for appraisals and property inspections, and the direction to add attorney costs and fees to date. (Exhibit jj to the Complaint.) Complaint, Para. 50. Answer, Para. 50. 65. Chase did not provide a written response acknowledging receipt of any of

[Lawyer 2]s letters or faxes within 20 days of receiving them. 66. Chase did not make appropriate corrections in the [Consumers] account,

including the crediting of any late charges or penalties, despite [Lawyer 2]s detailed Qualified Written Requests setting forth Chases mistakes in servicing the loan. 67. Despite receiving qualified written request letters from and on behalf of

[Consumer 1 and Consumer 2], and despite failing to respond appropriately to the qualified written requests, Chase reported to credit reporting agencies that [Consumer 1] was overdue and delinquent. Complaint, Para. 51. Answer, Para. 51. A copy of [Consumer 1]s credit report is attached, marked Plaintiffs Exhibit 16. 68. Chase made derogatory payment reports as to [Consumer 1] to each of the big

three credit bureaus, Equifax, Experian, and Trans Union, during the sixty business day period

16

following its receipt of [Lawyer]s March 27, April 12, and May 14, 2002 Qualified Written Requests. Chase reported the subject loan as being delinquent each month from April through September, 2002. 69. Chase did not make appropriate corrections in the account, including the crediting

of any late charges or penalties, nor did it transmit a written notification of any such correction. 70. Well more than a year after Chases account handler entered his November 6,

2001 Collection History Inquiry note that OUR LIEN IS ON THE WRONG PROPERTY, Plaintiffs Exhibit 17, Chase continued to ignore its 2605(e) duties to make appropriate account corrections in response to borrower inquiries. III. STANDARD FOR SUMMARY JUDGMENT Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment: shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. A summary judgment, interlocutory in character, may be rendered on the issue of liability alone, although there is a genuine issue as to the amount of damages. The entry of summary judgment is inappropriate where there exists a genuine and material issue of fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 24748, 106 S. Ct. 2505, 250910, 91 L. Ed. 2d 202 (1986). Substantive law defines which facts are material and only disputes over facts that might affect the outcome of the case will defeat summary judgment. Id. at 248, 106 S. Ct. at 2510. A factual dispute is genuine if a "reasonable jury could return a verdict for the non-moving party." Id. Although all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the non-moving party, once the movant has met its burden of demonstrating the absence of a genuine issue of material fact, the party

17

opposing summary judgment "must do more than simply show that there is some metaphysical doubt as to the material facts" to prevent its entry. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 547, 58687, 106 S. Ct. 1348, 135556, 89 L. Ed. 2d 538 (1986). It is not sufficient for the party opposing summary judgment to provide a scintilla of evidence supporting its case. Anderson v. Liberty Lobby, Inc., supra, 477 U.S. at 252, 106 S. Ct. at 2512. IV. ARGUMENT OF LAW RESPA establishes the requirements for how a mortgage loan servicer or lender must conduct its post-closing servicing of the loan. Twelve 12 U.S.C. 2605(e) details the duties and statutory obligations of a loan servicer or lender in receiving and responding to borrower written inquiries, providing the following: (e) Duty of loan servicer to respond to borrower inquiries. (1) Notice of receipt of inquiry. (A) In general. If any servicer of a federally related mortgage loan receives a qualified written request from the borrower (or an agent of the borrower) for information relating to the servicing of such loan, the servicer shall provide a written response acknowledging receipt of the correspondence within 20 days (excluding legal public holidays, Saturdays, and Sundays) unless the action requested is taken within such period. (B) Qualified written request. For purposes of this subsection, a qualified written request shall be a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that-(i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and (ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower. (2) Action with respect to inquiry. Not later than 60 days (excluding legal public holidays, Saturdays, and Sundays) after the receipt 18

from any borrower of any qualified written request under paragraph (1) and, if applicable, before taking any action with respect to the inquiry of the borrower, the servicer shall-(A) make appropriate corrections in the account of the borrower, including the crediting of any late charges or penalties, and transmit to the borrower a written notification of such correction (which shall include the name and telephone number of a representative of the servicer who can provide assistance to the borrower); (B) after conducting an investigation, provide the borrower with a written explanation or clarification that includes-(i) to the extent applicable, a statement of the reasons for which the servicer believes the account of the borrower is correct as determined by the servicer; and (ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower; or (C) after conducting an investigation, provide the borrower with a written explanation or clarification that includes-(i) information requested by the borrower or an explanation of why the information requested is unavailable or cannot be obtained by the servicer; and (ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower. (3) Protection of credit rating. During the 60-day period beginning on the date of the servicer's receipt from any borrower of a qualified written request relating to a dispute regarding the borrower's payments, a servicer may not provide information regarding any overdue payment, owed by such borrower and relating to such period or qualified written request, to any consumer reporting agency (as such term is defined under section 603 of the Fair Reporting Act [15 USC 1681a]). In support of his motion for partial summary judgment, [Consumer 1] claims that: Chase did not provide written responses acknowledging receipt of the Qualified

Written Requests within 20 days; 19

Chase did not respond appropriately to the [Consumers] and the [Consumers]

lawyers qualified written requests not later than 60 days after receipt of such qualified written requests; Chase did not correct [Consumer 1 and Consumer 2]s account in violation of 12

U.S.C. 2605(e)(2); Chase did not cease its collection efforts and demands by letter and telephone

collection harassment after receiving qualified written request letters from or on behalf of [Consumer 1 and Consumer 2], in violation of 12 U.S.C. 2605(e)(2). Chase did not conduct an appropriate investigation after receiving qualified

written request letters from or on behalf of [Consumer 1 and Consumer 2], in violation of 12 U.S.C. 2605(e)(2); Chase reported to credit reporting agencies that the [Consumers] were overdue

and delinquent, in violation of U.S.C. 2605(e)(3). The duties that RESPA imposes on lenders to respond to borrower inquiries are part of what Congress intended to be a remedial consumer protection statute that is to be construed liberally in order to best serve Congress intent. Rawlings v. Dovenmuehle Mortgage, Inc., 64 F. Supp. 2d 1156, 1165 (M.D. Al. 1999). A. 12 U.S.C. 2605(e)(1) Under 12 U.S.C. 2605(e) (1)(A), RESPA requires a servicer to provide the consumer a written acknowledgment of the consumers account inquiry within twenty (20) days of receiving the inquiry. Ploog v. Homeside Lending, Inc., 209 F. Supp. 2d 863, 868 (N.D. Ill. 2002) (The servicer must provide a written response acknowledging the receipt of a qualified written request with 20 days of receiving the borrowers letter.)

20

Chase did not did not provide written responses acknowledging receipt of the Qualified Written Requests within 20 days as to either [Lawyer]s March 27, April 12, or May 14, 2002 Qualified Written Requests, or to [Lawyer 2]s November 22, December 4, December 16, or December 17, 2002 Qualified Written Requests. Thus, RESPA was violated, and liability attaches. Summary judgment as to liability for each separate violation is appropriate. As the Rawlings court noted, The relevant damages section provides that whoever fails to comply with any provision of this section shall be liable to the borrower for each such failure. 12 U.S.C. 2605(f) Rawlings v. Dovenmuehle Mortgage, Inc., 64 F. Supp. 2d at 1161, n.3. B. 12 U.S.C. 2605(e)(2) At 12 U.S.C. 2605(e)(2) RESPA defines the substance of a servicers required response. In addition to the twenty (20) day acknowledgment of receipt, the servicer must take one of three actions. Within sixty (60) days after receipt of the Plaintiffs lawyers letters, Chase had to: 1. Correct the account and credit all late charges and penalties and transmit a written

notice of correction; 2. After conducting an investigation, provide a written explanation of why Chase

believed the account status to be correct and identify an individual who [Consumer 1] could contact by telephone to discuss the matter (12 U.S.C. 2605 (e)(2)(B)); or 3. After conducting an investigation, provide all of the information that had been

requested, again with an employee contact (12 U.S.C. 2605(e)(2)(C)). Thus, after acknowledging receipt of a Qualified Written Request in writing within 20 days of receipt:

21

The servicer must then do one of three things within sixty days of receiving the letter: (1) correct the borrower's account and inform the borrower of those corrections in writing; (2) investigate and provide a written explanation to the borrower of the reasons that the servicer believes the borrower's account is correct; or (3) investigate and provide a written explanation to the borrower of the reasons that the servicer cannot obtain the information that the borrower is requesting. 12 U.S.C. 2605(e)(2). Johnstone v. Bank of America, 173 F. Supp. 2d 809, 812 (N.D. Ill. 2001) With respect to either [Lawyer]s March 27, April 12, or May 14, 2002 Qualified Written Requests, or to [Lawyer 2]s November 22, December 4, December 16, or December 17, 2002 Qualified Written Requests, the Defendant did not correct the account and credit all late charges and penalties and transmit a written notice of correction. It did not provide a written explanation of why Chase believed the account status to be correct and identify an individual who [Consumer 1] could contact by telephone to discuss the matter. It did not provide all of the information that had been requested, again with an employee contact (12 U.S.C. 2605(e)(2)(C)). It did not respond to the issues of requiring and then force placing insurance on the Tennessee property. It continued its campaign of collection letters and telephone calls. It did not respond appropriately or conduct an appropriate investigation after receiving the Qualified Written Requests. As to each of the Qualified Written Requests, RESPA was violated in this respect as well, and liability attaches. Summary judgment as to liability for each separate violation is appropriate. C. 12 U.S.C. 2605(e)(3) At 12 U.S.C. 2605(e)(3), RESPA prohibits a lender from reporting any derogatory payment history to any credit reporting agency until it has responded to the Plaintiffs written inquiries in the manner required by RESPA. Specifically, the statute reads: (3) Protection of credit rating. During the 60-day period beginning on the date of the servicer's receipt from any borrower of a qualified written request relating to a dispute regarding the borrower's payments, a servicer may not provide information regarding any overdue payment, owed by such borrower and relating to such period or qualified written 22

request, to any consumer reporting agency (as such term is defined under section 603 of the Fair Reporting Act [15 USC 1681a]). See, generally, Johnstone v. Bank of America, 173 F. Supp. 2d at 813; Ploog v. Homeside Lending, Inc., 209 F. Supp. 2d at 868. Despite this prohibition, Chase made derogatory payment reports as to [Consumer 1] to each of the big three credit bureaus, Equifax, Experian, and Trans Union, during the sixty business day period following its receipt of [Lawyer]s March 27, April 12, and May 14, 2002 Qualified Written Requests. Chase reported the subject loan as being delinquent each month from April through September, 2002. RESPA was violated with each derogatory reporting, and liability attaches as to each. Each of Chases RESPA violations is independently remediable by 12 U.S.C. 2605(f). The Plaintiff is entitled to summary judgment as to liability for each violation. Because 2605(e) is to be construed liberally to in order to best serve Congress intent, even unintentional acts that result in noncompliance violate 2605(e)(2). Rawlings v. Dovenmuehle Mortgage, Inc., 64 F. Supp. at 1163. CONCLUSION Borrowers who are engaged in a dispute with a lender often experience frustration in obtaining account information and in getting someone to take their complaint seriously. Even sophisticated consumers can spend countless hours attempting to resolve minor servicing errors, often without success. An unresolved dispute over a misapplied payment or an improper charge can spiral out of control when the lender refuses to accept future payments or initiates foreclosure proceedings, as occurred here. It was for this reason that Congress amended RESPA in 1990 to impose new requirements on lenders and servicers of federally related mortgage loans, requiring servicers to 23

respond to borrower inquiries and correct account errors. The new duties under 2605(e) must be strictly enforced. Chase Manhattan Mortgage Corporation did not comply with the requirements imposed under 2605(e). The Court should grant Plaintiff [Consumer 1]s Motion for Partial Summary Judgment as to Chases liability for its RESPA violations, thereby narrowing the issues remaining for resolution at trial. Respectfully submitted, [Consumer 1] [Consumer 2] By Counsel

_____________________________________ [Counsel for Plaintiffs] Counsel for Plaintiffs

CERTIFICATE OF SERVICE I hereby certify that a copy of the above and foregoing has been served upon opposing counsel of record by placing a copy of same in the United States Mail, properly addressed and first class postage pre-paid on this the ______ day of December, 2003. [Counsel for Defendant] ___________________________________ [Counsel for Plaintiffs]

24

You might also like