In April 2024, the United States District Court for the District of Massachusetts held in a matter of first impression that a borrower must allege actual damages to qualify for relief under the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601 et seq. Specifically, the borrower must allege actual damages before arguing statutory damages under 26 U.S.C. § 2605(f)(1)(B)'s "pattern and practice" language.
Case Background
Plaintiff filed a complaint against the servicer of her mortgage after she had submitted two Qualified Written Requests for Information (QWR) and Notices of Error to the servicer under RESPA to dispute the amount owed on the loan. The servicer responded to plaintiff's requests and produced twenty documents. However, servicer did not provide plaintiff with the requested audio recordings and call transcripts about the loan after both QWRs requested them.
Plaintiff alleged that the servicer violated its statutory duty under RESPA for failing to provide these audio recordings and transcripts. Plaintiff further alleged that the servicer's failure to do so caused her actual damages for the postage costs plaintiff had incurred to send the QWRs and emotional damages. The defendant moved to dismiss the case. During that motion's hearing, the court requested additional briefing on the emotional distress claim, which both parties provided.
Analysis
In its opinion, the court found that there was zero case law to support the plaintiff's claim that she was entitled to the de minimis cost of postage to send her additional QWRs. In relying on prior circuit decisions, the court reasoned that the plaintiff only incurred the postage costs because of her attempt to "establish" a RESPA violation. Accordingly, the postage costs were not the "result" of a RESPA violation. The court further found that plaintiff did not sufficiently allege that the servicer's failure to provide the audio recordings and call transcripts had caused her enough "turmoil" to sustain her emotional damages claim.
As to the statutory damages claim, the court acknowledged that the servicer's failure to provide the audio recordings and call transcripts could have constituted a plausible RESPA violation if plaintiff had been able to prove actual damages. However, based on the interpretations of sister circuits, the court held that the word "additional" in § 2605(f)(1)(B) implied that a plaintiff could not recover "pattern or practice damages in the absence of actual damages." Accordingly, the court dismissed plaintiff's statutory damages claim and dismissed the matter in its entirety.
Implications Going Forward
Despite the positive outcome for the servicer, all servicers should be mindful about their compliance with QWRs to avoid potential claims for "pattern or practice" violations under RESPA if a borrower can plausibly allege actual damages. Servicers may want to review their internal policies and procedures for responding to QWRs against the wording of § 2605(f) to prevent potential RESPA litigation.
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