The federal Real Estate Settlement Procedures Act (RESPA) ensures that consumers in real estate transactions receive timely information about the costs of the settlement process. This law also imposes specific requirements on loan servicers.
Some of RESPA's requirements can help people facing foreclosure who believe their servicers have made mistakes in servicing their accounts. Specifically, RESPA sets forth requirements for qualified written requests, which require servicers to correct errors or provide information to borrowers who ask for it.
Making a qualified written request can be especially helpful if you're facing a nonjudicial foreclosure.
If your home is in foreclosure and you're having difficulty getting information about your account from your loan servicer, you can make a qualified written request. A "qualified written request" is a letter written to the servicer to:
A borrower can force the servicer to provide detailed information about the account by making a qualified written request.
Under amendments to Regulation X, which implements RESPA, that went into effect January 10, 2014, your inquiry will be categorized as a "request for information" or a "notice of error." These categorizations expand on the previous qualified written request requirements.
Depending on the type of request you send, different time frames apply to when the servicer must respond to you.
The servicer must acknowledge a request for information within five business days and respond within 30 business days. The servicer can usually extend the 30-day response period by 15 business days if it tells you about the extension within the 30-day period and explains the delay. But if you want to know the identity, address, or other contact information for the owner of your mortgage loan, the servicer has to give you that information within ten business days. (12 C.F.R. § 1024.36).
Your servicer must acknowledge a written request that asserts a particular error, like failing to properly apply payments or certain errors about loss mitigation, within five business days. It must correct the error, provide notice about the correction, and provide contact information for you to follow up (or let you know that no error occurred along with the reasons for this determination):
The 30-day time frame can be extended for an additional 15 days if the servicer notifies you within the 30-day period of the extension and gives you the reasons for the delay. The servicer can't get the extension, however, if the notice of error pertains to a payoff statement request or certain errors pertaining to loss mitigation and foreclosure. (12 C.F.R. § 1024.35).
Sometimes, the servicer doesn't have to comply with your error resolution or information request, like if the notice of error or request for information is essentially the same as one you previously sent or your request is overbroad. However, it must notify you within five business days after making that determination and provide the basis for its determination.
To make a qualified written request, you must send a letter to the servicer with the following information:
You don't have to use a specific format when making a qualified written request, but the letter should:
You can find sample letters on the Consumer Financial Protection Bureau's website. Follow the "sample letter" links.
You may send a request for information and a notice of error in the same letter or separately. Send the letter via certified mail, return receipt requested, so you can confirm that the servicer received the letter.
If the servicer fails to comply with the law, a borrower may recover:
The statute of limitations (when you must sue) for violations is three years. (12 U.S.C. § 2614).
The lender or servicer may generally initiate or continue a foreclosure even if a qualified written request is outstanding. But it can't hold a foreclosure sale while the request is pending if you send a notice of error based on certain loss mitigation errors, like an error based on the 120-day preforeclosure waiting period or dual-tracking restrictions.
Then, the issue must be resolved before the foreclosure sale or within 30 days, whichever is earlier, so long as the servicer receives the notice of error more than seven days before a foreclosure sale. For a request submitted seven or fewer days before a foreclosure sale, the servicer must make a good faith attempt to respond to the borrower, orally or in writing, and either correct the error or state why the servicer has determined that no error has occurred. (12 C.F.R. § 1024.35).
Qualified written requests can be a particularly useful tool in a nonjudicial foreclosure, where the lender doesn't have to go through state court to foreclose. Because a nonjudicial foreclosure doesn't go through the court system, a judge won't order the servicer to produce information about the account for you to review unless you file your own lawsuit.
So, a qualified written request presents an excellent opportunity for you to get information about your account. To find out if your state primarily uses a judicial or nonjudicial foreclosure process, check our Summary of State Foreclosure Laws.
If you're facing foreclosure and think that the servicer has made errors in servicing your account, a qualified written request is just one way to deal with the matter. If the servicer doesn't respond to your notice of error or request for information, disagrees that it made an error, or refuses to provide certain information, consider consulting with a lawyer.
Talk to an attorney immediately if you're facing an imminent foreclosure sale. Sending the servicer a notice of error or request for information is very unlikely to stop a foreclosure sale. An attorney can advise you about what to do and help you enforce your rights.
It's also a good idea to talk to a HUD-approved housing counselor if you're having trouble with your mortgage payments or facing a foreclosure.