Section 6 of the Real Estate Settlement Procedures Act (12 U.S.C. 2605) gives certain classes of borrowers rights, regardless of whether the borrowers loan was held by the lender or the loan service was transferred to one or more loan servicing companies. If a borrower believes there is an issue with the loan servicing (including escrow account questions) on their loan the following steps must be carefully followed:
1. The borrower or the borrower’s attorney must send a “Qualified Written Request” to the loan servicer. *See below as to what is required on a Qualified Written Request Letter.
2. The loan servicer must provide the borrower or borrower’s attorney with a written acknowledgment within twenty (20) Business Days of receipt of the borrower’s request.
3. The loan servicer has no more than 60 days Business Days after receiving the borrower’s request to correct the errors on the borrower’s loan account or the loan servicing company must provide the borrower with a written clarification disputing any such error.
4. Its extremely important to note that during this sixty (60) Business Day period that the borrower’s servicer is forbidden to provide a credit reporting agency any information concerning any overdue payment related to such period or qualified written request.
What kind of damages would a borrower or a loan servicing company potentially be entitled/subjected to? Well Section 6 of RESPA provides for actual damages, additional damages, and costs for individuals or classes of individuals in circumstances where the services are shown to have violated the requirements of Section 6.
Section 6 of RESPA has a 3 year statute of limitations.
It is important to note that borrowers who are experiencing loan servicing irregularities continue to make their monthly mortgage payments.
**What is a “Qualified Written Request?”
A RESPA Qualified Written Request is a written letter which includes the borrower’s name, account number, and must specifically ask the loan servicer for specific documentation regarding the loan.
If you are a borrower and you are experiencing loan servicing issues or are a corporation that needs RESPA Section 6 compliance guidance please give the Sterbcow Law Group LLC a call.