The Consumer Financial Protection Bureau ("CFPB") makes sure that borrowers "are treated fairly by banks, lenders, and other financial institutions." The Department of Housing and Urban Development implemented Regulation X in 1975, which incorporated the Real Estate Settlement Procedures Act ("RESPA") and designated the CFPB with rule-making authority to ensure compliance under this Act. This congressional response "to [the] perceived abuses in real estate settlement process" attempted to "protect consumers from unnecessarily high settlement charges resulting from those abuses."
A qualified written request ("QWR") is written correspondence from the borrower to servicer, including the identity, name, and account of the borrower, which either (1) states the reasons why a borrower believes the account is in error (''Notice of Error") or (2) provides detail to the servicer regarding information related to the servicing of the mortgage loan sought by the borrower (“Request for Information”). Under RESPA, Congress obligates servicers with a particular duty to respond to a QWR to ensure a borrower’s concerns are met. This regulation can be a powerful tool for borrowers, especially those on the brink of foreclosure. For example, if a borrower sends a Notice of Error based on loss-mitigation errors, then the issue must be resolved before a foreclosure sale can proceed.
This memorandum examines what constitutes a Notice of Error and whether a service provider timely and properly acknowledges, investigates, and complies with a borrower’s QWR under RESPA. Part I examines the responsibilities of a borrower to correctly issue a QWR. Part II focuses on the responsibilities of a servicer in receipt of a QWR. Part III discusses exceptions which do not trigger a servicer’s duty to respond.