Disclaimer

The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.

 Skip to Content

New CFPB Regulations Subject Mortgage Servicers to Private Lawsuits
December 22, 2014

The Consumer Financial Protection Bureau (CFPB) amendments to Regulation X, which implements the Real Estate Settlement Procedures Act (RESPA), place new and onerous requirements on mortgage servicers to correct errors and provide information that borrowers request. Under the new rules, borrowers, or their authorized representatives, who notify mortgage servicers of a claimed loan servicing error (Notice of Error) trigger new servicer obligations to respond under tight deadlines. These obligations carry potential litigation risks.

The amendments require servicers to provide written acknowledgement of the Notice of Error within five days. If the claimed error relates to failure to provide an accurate payoff balance, servicers have only seven days from receipt of the Notice of Error to investigate and provide a response that either confirms the error and states it has been corrected, or states that the servicer has determined no error occurred, the basis for that determination, and that the borrower is entitled to request supporting documents. If the Notice of Error claims improper pursuit of foreclosure, servicers must respond within 30 days, or before the foreclosure sale, whichever is earlier. Servicers must respond to all other types of asserted errors within 30 days, although an additional 15-day extension may be obtained to respond to such assertions.

However, the regulations do not require that a Notice of Error be submitted in any particular format. Servicers could find it challenging to ensure these notices are recognized and properly handled within the response deadlines.

In its introduction to the new regulations, the CFPB stated that regulations established pursuant toSection 6 of RESPA are subject to Section 6(f) of RESPA, which gives borrowers a private right of action to enforce such regulations. Consequently, plaintiffs’ attorneys, who have already filed several actions against servicers alleging failures to respond to qualified written requests that dispute mortgage loan servicing errors, can add a new weapon to their arsenal: claims for failure to respond to Notices of Error within the time or in the manner required by the new regulation.
Related Practices
Real Estate Consumer Finance Real Estate Consumer Finance
Related Industries
Real Estate Real Estate
©2024 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.