Tuesday, February 25, 2014
Saturday, February 22, 2014
FPD Attorney Admits Foreclosure Defense Fails
But Foreclosure Pretender Defenders (FPDs) Scam Their Clients Anyway
Portions Copyright © 22 February 2014. All rights reserved. Distribute freely.
Note: in this article I shall refer to Foreclosure Pretender Defenders as “FPDs”
Table of Contents
"I fight like hell for people, but I'm also constantly telling my clients that at the end you're probably going to lose it.''
Mark Stopa, Tampa Bay area Foreclosure Pretense Defense (FPD) attorney.
Tampa Bay Times Writer Susan Taylor Martin NAILED IT in her 2 June 2011 article recounting her above-cited interview of attorney Mark Stopa. She wrote this:
“With 466,500 Florida mortgages in default, more and more lawyers are vowing to 'help you fight foreclosure.' … But no matter what the client chooses, the bottom line is usually this: Hiring an attorney will delay a final judgment of foreclosure, but it won't keep the bank from ultimately taking back the house.”
Martin pointed out that the client could hope for nothing better than to avoid a deficiency judgment in the final order of foreclosure. She quoted Stopa as saying this:
"The hope is that by making it difficult for the bank, they'll get frustrated and work out some sort of solution my clients want,''
Here we have a prominent Foreclosure Pretender Defender attorney (FPD) admitting to a world-class journalist that he cannot win a foreclosure battle at all. The client will lose the house, period, end of subject. I don't know how Martin got that admission from Stopa, but she has become my hero for doing it. America needs more reporters/writers with Martin's talent and lust for truth.
I applaud Martin's incisive, and uniquely honest, reporting about the the Foreclosure Pretense Defense (FPD) “scam” which lawyers like Mark Stopa perpetrate across America. I have tirelessly exposed this flagrant legal malpractice, to the chagrin of some of those attorneys. And I now highlight Martin's article here in my own commentary about Mark Stopa's outing of himself and fellow Foreclosure Pretender Defender attorneys (FPDs) in his interview with Martin. I congratulate Martin on getting that admission from Stopa.
I work tirelessly to expose the Foreclosure Pretense Defense (FPD) scam perpetrated by Mark Stopa, Matt Weidner, Randall Reder, Tom Ice, Mike Wasylik, and lawyers like them. I also expose their fellow scammers like Ryan Zimmerman and Richard Kahn who provide fake “loan audits” or worthless “securitization audits,” and chain of title audits. See my articles at http://lixe.org.
But I don't have the altitude and readership of Martin, so not enough mortgage victims see my commentaries in time to save themselves from the vampire vultures of the foreclosure defense industry, including fake loan auditors and worthless securitization auditors.
FPDs prefer to call themselves “JEDTIs” in and around the Tampa Bay area. FPD Matt Weidner of St. Pete expained at http://mattweidnerlaw.com/2011-rise-of-the-jedti-warriors/:
“JEDTI= Jurists Engaged in Defense of Title Integrity. The first JEDTI group was formed by Clearwater, Florida attorney and title insurance expert Greg Clark. It’s a cohesive group of att0rney members with vast and varied legal backgrounds and areas of expertise, including appellate law, trial work, corporate and business transactional and litigation experience. The members are committed to defending judges and our courts and to sounding the alarm that today’s sloppy and improper foreclosure practices are going to have catastrophic consequences on property ownership in this country for decades to come. JEDTI presents both a warning and a solution.”
The reader can see from Weidner's laudatory comments that he has a slobbering love affair with fellow FPDs. They intend to whine over wrongful foreclosure while knowing with absolute certainty that the client breached the note by failing to make timely payments, and that the law requires the judge to enforce the note and mortgage by ordering the sale of the house in order to raise money to discharge the note. These days that generally results in giving the house to the foreclosure plaintiff because the loan balance far exceeds the amount the house will bring at auction.
But the FPDs NEVER intend to examine the mortgage or attack the lender and lender's agents for underlying causes of action. They generally do not have the legal knowledge and skill to do such an examination, and they typically would have to invest $10,000 of lawyer time doing it IF they had the requisite competence. Their mostly impoverished clients cannot afford that.
But those slick lawyers know full well that clients can probably afford to pay them $500 to $1000 a month for as long as the lawyer can keep them in the house. It never occurs to the clients that they can drag out the inevitable foreclosure on their own, without a lawyer's help by using the loss mitigation methods or Regulation X to negotiate short sale, loan mod, deed in lieu of foreclosure, etc. Instead of telling their clients this reality, they lead the clients into paying them even more for arranging loan mods and short sales, a service for which most clients don't need a lawyer.
Bottom line, FPDs and JEDTI attorneys dealing with foreclosure defendants generally fight the wrong battle, one they can only lose. They never seem to want to fight the one battle they might win – the mortgage battle. In the mortgage battle, they can get the mortgage examined to find the causes of action, and then use those causes as a hammer to bludgeon the bank through settlement or lawsuit into giving the client compensation for the injury. Done right, they can win monumental damages awards and legal fees for the client.
See Brown v. Quicken Loans as an example of helping mortgage victims the right way. The attorney, one of apparently rare talent, examined the foreclosure victim's mortgage and found massive contract breaches and torts. A settlement effort failed. But the attorney won $2.1 million in punitive damages for Brown, and half a million for his firm. Quicken appealed, the case went back to trial, and won nearly $3.7 million for Brown and ¾ million for the firm. Last time I looked the dust had not yet settled, but this predatory lending scam of Quicken Loans will end up grossing over $5 million for Brown and her attorney. FPD's should snatch a page from that lawyer's notebook and learn how to do what I've preached for the past several years.
I encourage attorneys and mortgage victims to focus on the mortgage battle because that gives them some hope of winning. The FCIC Report of January 2011 exposed the conspiracy between government and the lending industry in a predatory lending racket that created the recent financial crisis. Mortgagors get nowhere with that argument in court. They need specific proof that the lender or lender's agents injured them individually and personally. But FPD attoneys like Stopa never bother examining the foreclosure victim's mortgage-related documents comprehensively for evidence of torts, breaches, and legal errors that injured the mortgagor. So they always lose in court. The FPDs try to claim they won when they get a temporary dismissal, but they all know, as Stopa admitted to Martin, that the borrower will ultimately lose the house to foreclosure sale.
I know only one company that has the demonstrable competence to examine mortgages and FIND the causes of action for a fourth to a tenth the price a competent law firm would charge The Chief Examiner has 35 years as a criminal defense consultant and 7 years as a mortgage examiner. He teaches lawyers how to strategize and engineer a win, and sits beside them in court to guide them as necessary. I don't know any lawyer or loan auditor or other professional with his experience and ability. He does his job impeccably.
I know two Tampa Bay area professional women, one a Realtor/Investor and the other a free-lance Court Reporter, who hired that company, received mortgage examination reports in less than 2 weeks, and found out that lenders or their agents had cheated them. The realtor had paid attorney #1 $20,000 to defend her against the foreclosure, but she lost her home because he did not find and use the causes of action within the statute of limitations when he had the chance. The Court Reporter had paid Attorney #2 monthly for YEARS while he sat on the same papers she gave the mortgage examiner. On the verge of losing her house, she went back to Attorney #2 after firing him and asked him to help save her house using the information in the examination report. He did not want to do it, of course, because it makes him look like a fool. And I believe he will sabotage the case rather than admitting he committed LEGAL MALPRACTICE against his client, and in fact against ALL of his foreclosure victim clients.
On top of this, I know a professional woman with a PhD in drug counseling who lives in the Jupiter area of south Florida. The lender, the servicer, and Attorney #3 cheated her. I first learned about her when I saw a TV news show about her picketing in front of the lawyer's office. A landscaper acquaintance of hers called me (after reading one of my articles) while they lunched together and discussed her case. They had the same misfortune with the same lawyer telling them to breach their notes to qualify for a loan mod. He gouged money out of them monthly for YEARS. The drug counselor got her mortgage examined and found another lawyer. Because of her and other's complaints Attorney #3, the Bar told him to yield his bar license "or else," so he gave up his license. Now the landscaper has finally, after losing and leaving her house, decided to get her mortgage examined. Now she has a least a ghost of a chance of winning something from the bank.
Understand this point about the legal malpractice, such as the above, rife in the FPD community. Legal malpractice happens when an attorney breaches a duty to a client, and the client suffers an injury and damages as a result. An attorney owes to the client who asks for help defending a breach of contract lawsuit (such as foreclosure) the legal duty of examining that contract and related documents and assessing all surrounding circumstances in an effort to discover whether the plaintiff or original lender breached the contract first, committed some related tortious act against the client, or committed some legal error related to lending and servicing the contract during its duration. A lawyer who fails to do that does not commit legal malpractice UNLESS the client suffers damages as a result.
Apparently, Foreclosure Pretender Defender attorneys (FPDs) feel safe not searching for causes of action because they know the mortgagor-client expects to lose the house anyway.
But, if the client loses the house to foreclosure because the attorney failed to examine the mortgage, and then the client gets a mortgage examination done which shows egregious causes of action that could have convince the plaintiff to let the mortgage victim keep the house, THEN loss of the house constitutes an enormous damage. I believe most foreclosure victims whom FPDs have injured that way COULD prevail in a legal malpractice lawsuit against the FPD.
Unfortunately, America has no “Mortgage Attack” legal culture. So, lawyers don't know how to do proper mortgage examinations, lust too much for the money to pay for one, feel entirely too lazy to attack the lender and lender's agents over causes of action the exam report reveals, and FPDs manage to make plenty of money from the thousands of people they have bilked by filing cookie cutter pleadings other FPDs have shared with them (such as through the JEDTI group connections). Their clients always lose the house in the end if they don't do a loan mod.
To any journalist of altitude who will commit to doing this story justice, I'll give you the contact information for the foreclosure victims, their crooked lawyers, and the mortgage examiner. It's up to you to get the lawyers to talk with you. The examiner is my personal friend, and he will gladly give you his story. And I believe the foreclosure victims will gladly give you their stories.
Here's the point: If the public really understood that lenders and their agents injured 9 out of 10 home mortgagors, and that a proper mortgage examination could provide them with proof that their lender injured them, THAT might cause a rush to get proper mortgage examinations, even after the victims lost their houses to foreclosure. That could lead to a flurry of legal malpractice lawsuits and litigation against recalcitrant lenders who cheated their borrowers since before the financial crisis began. Finally, mortgagors might get to save their homes from the ravenous jaws of foreclosure.
I imagine banks have their hooks into mainstream media boards of directors and they will never allow journalists and reporters to such a damaging exposure of malfeasance by lenders, appraisers, mortgage brokers, and lawyers. But SOMEBODY with a voice OUGHT to do it. I just don't have the requisite altitude, credentials, or voice.
Call me if you want information on how to get a proper mortgage examination and want to know how to use the information it provides. Call me if you work gainfully as a journalist or reporter and feel willing to expose the corrupt underbelly of avarice and malpractice in the Foreclosure Pretense Defense (FPD) legal industry.
Meanwhile, remember that I am not a licensed attorney, I do not practice law or give legal advice, and you should consult a competent, qualified attorney in all questions of law and its application to your circumstances.
Friday, February 21, 2014
Mortgage Loan Servicing Duty under RESPA & Reg X
Servicer Response to Mortgagor Requests – Inquiries and Error Notices
Mortgage Loan Servicing Duty under RESPA & Reg X.pdf
Portions Copyright © 21 February 2014 by http://bobhurt.com/. All rights reserved. Distribute freely.
Anyone dealing with mortgage servicers should understand the legal requirements under the Real Estate Settlement Procedures Act (RESPA) and the associated Code of Federal Regulations (Regulation X). See below text for duties the servicer owes to the mortgagor in handling qualified written requests and notices of error and resolving those errors.
Take note of the duty in 12 USC 2605(1)(a) and the meaning of "servicing" in 12 USC 2605(i)(3). To me this means the servicer has NO duty to provide answers to questions or correct errors unrelated to servicing. This might explain why your servicer ignores your Qualified Written Requests (QWRs).
I STRONGLY RECOMMEND that anybody with a mortgage read the items below (and follow their links) FULLY, especially if facing foreclosure. The law and regulation include these:
12 USC 2601 (RESPA)
12 CFR 1024 (REGULATION X)
However, it makes sense to put EVERY CULPABLE PARTY on notice through the same Notice of Grievance (NOG)a mortgagor would send the servicer in compliance with Section 20 of the standard Fannie Mae/ Freddie Mac mortgage security instrument. First of all, the contract requires it prior to taking action in court against the lender, holder, or servicer. Second, if the servicer and servicer's attorney ignore it, that might convince a judge or jury that the servicer and lawyer simply flouted the law and other legal duties to the mortgagor. Most judges would not see their behavior in a good light.
Mortgagors whom the lender or servicer injured or, whose correspondence the servicer ignored, should write a complaint to the Consumer Financial Protection Bureau (CFPB) using the form at http://consumerfinance.gov, and include a copy of correspondence with the servicer. Such a complaint can include information about servicer employees who violated any provision of any of the above laws and regulations. Note the requisite timing for servicers: 5 business days to acknowledge, 30 days to correct the errors, with a possible 15-day extension.
For those considering loan modification, focus on 12 CFR 1024.41. I do not recommend loan mods because they only benefit the bank and most borrowers will eventually face foreclosure when they cannot pay the balloon. Furthermore, I consider them outrageously expensive. Servicers and lawyers who arrange them often get a huge stipend for the effort, and that gets added on top of the loan balance.
When it comes to negotiating a settlement like a refinance, mortgagors have far better negotiating power if they can prove the lender or agents injured them at the inception of the loan. You see, if the borrower injured the holder by breaching the note and failing to make timely payments, the borrower has ZERO negotiating power. But if the lender injured the borrower FIRST, at the inception of the loan, and the lender knows the borrower can prove it, that gives the borrower a huge negotiating advantage.
For that reason, I recommend that all mortgagors get a competent professional to examine their mortgage-related documents comprehensively. That constitutes the ONLY methodology with a 80%+ chance of convincing the holder to set
tle in a way that benefits the borrower (such as refinancing a reduced loan balance at a low fixed rate for 30 years).
Call me if you want to get your mortgage examined. I can explain all the details to you and give you strategic guidance free.
727 669 5511
Code of Federal Regulations Title 12: Banks and Banking
§1024.3 E-Sign applicability.
§1024.4 Reliance upon rule, regulation or interpretation by the Bureau.
§1024.4 Reliance upon rule, regulation, or interpretation by the Bureau.
§1024.5 Coverage of RESPA.
§1024.6 Special information booklet at time of loan application.
§1024.7 Good faith estimate.
§1024.8 Use of HUD-1 or HUD-1A settlement statements.
§1024.9 Reproduction of settlement statements.
§1024.10 One-day advance inspection of HUD-1 or HUD-1A settlement statement; delivery; recordkeeping.
§1024.12 No fee.
§1024.14 Prohibition against kickbacks and unearned fees.
§1024.15 Affiliated business arrangements.
§1024.16 Title companies.
§1024.17 Escrow accounts.
§1024.20 List of homeownership counseling organizations.
§1024.21 Mortgage servicing transfers.
§1024.23 ESIGN applicability.
§1024.32 General disclosure requirements.
§1024.33 Mortgage servicing transfers.
§1024.34 Timely escrow payments and treatment of escrow account balances.
§1024.35 Error resolution procedures.
§1024.36 Requests for information.
§1024.37 Force-placed insurance.
§1024.38 General servicing policies, procedures, and requirements.
§1024.39 Early intervention requirements for certain borrowers.
§1024.40 Continuity of contact.
§1024.41 Loss mitigation procedures.
Appendix A to Part 1024—Instructions for Completing HUD-1 and HUD-1a Settlement Statements; Sample HUD-1 and HUD-1a Statements
Appendix B to Part 1024—Illustrations of Requirements of RESPA
Appendix C to Part 1024—Instructions for Completing Good Faith Estimate (GFE) Form
Appendix D to Part 1024—Affiliated Business Arrangement Disclosure Statement Format Notice
Appendix E to Part 1024—Arithmetic Steps
Appendix MS—Mortgage Servicing
Appendix MS-1 to Part 1024
Appendix MS-2 to Part 1024
Appendix MS-3 to Part 1024
Appendix MS-4—Model Clauses for the Written Early Intervention Notice
Supplement I to Part 1024—Official Bureau Interpretations
(a) Notice of error. A servicer shall comply with the requirements of this section for any written notice from the borrower that asserts an error and that includes the name of the borrower, information that enables the servicer to identify the borrower's mortgage loan account, and the error the borrower believes has occurred. A notice on a payment coupon or other payment form supplied by the servicer need not be treated by the servicer as a notice of error. A qualified written request that asserts an error relating to the servicing of a mortgage loan is a notice of error for purposes of this section, and a servicer must comply with all requirements applicable to a notice of error with respect to such qualified written request.
(b) Scope of error resolution. For purposes of this section, the term "error" refers to the following categories of covered errors:
(1) Failure to accept a payment that conforms to the servicer's written requirements for the borrower to follow in making payments.
(2) Failure to apply an accepted payment to principal, interest, escrow, or other charges under the terms of the mortgage loan and applicable law.
(3) Failure to credit a payment to a borrower's mortgage loan account as of the date of receipt in violation of 12 CFR 1026.36(c)(1).
(4) Failure to pay taxes, insurance premiums, or other charges, including charges that the borrower and servicer have voluntarily agreed that the servicer should collect and pay, in a timely manner as required by § 1024.34(a), or to refund an escrow account balance as required by § 1024.34(b).
(5) Imposition of a fee or charge that the servicer lacks a reasonable basis to impose upon the borrower.
(6) Failure to provide an accurate payoff balance amount upon a borrower's request in violation of section 12 CFR 1026.36(c)(3).
(7) Failure to provide accurate information to a borrower regarding loss mitigation options and foreclosure, as required by § 1024.39.
(8) Failure to transfer accurately and timely information relating to the servicing of a borrower's mortgage loan account to a transferee servicer.
(9) Making the first notice or filing required by applicable law for any judicial or non- judicial foreclosure process in violation of § 1024.41(f) or (j).
(10) Moving for foreclosure judgment or order of sale, or conducting a foreclosure sale in violation of § 1024.41(g) or (j).
(11) Any other error relating to the servicing of a borrower's mortgage loan.
(c) Contact information for borrowers to assert errors. A servicer may, by written notice provided to a borrower, establish an address that a borrower must use to submit a notice of error in accordance with the procedures in this section. The notice shall include a statement that the borrower must use the established address to assert an error. If a servicer designates a specific address for receiving notices of error, the servicer shall designate the same address for receiving information requests pursuant to § 1024.36(b). A servicer shall provide a written notice to a borrower before any change in the address used for receiving a notice of error. A servicer that designates an address for receipt of notices of error must post the designated address on any website maintained by the servicer if the website lists any contact address for the servicer.
(d) Acknowledgment of receipt. Within five days (excluding legal public holidays, Saturdays, and Sundays) of a servicer receiving a notice of error from a borrower, the servicer shall provide to the borrower a written response acknowledging receipt of the notice of error.
(e) Response to notice of error. (1) Investigation and response requirements.(i) In general. Except as provided in paragraphs (f) and (g) of this section, a servicer must respond to a notice of error by either:
(A) Correcting the error or errors identified by the borrower and providing the borrower with a written notification of the correction, the effective date of the correction, and contact information, including a telephone number, for further assistance; or
(B) Conducting a reasonable investigation and providing the borrower with a written notification that includes a statement that the servicer has determined that no error occurred, a statement of the reason or reasons for this determination, a statement of the borrower's right to request documents relied upon by the servicer in reaching its determination, information regarding how the borrower can request such documents, and contact information, including a telephone number, for further assistance.
(ii) Different or additional error. If during a reasonable investigation of a notice of error, a servicer concludes that errors occurred other than, or in addition to, the error or errors alleged by the borrower, the servicer shall correct all such additional errors and provide the borrower with a written notification that describes the errors the servicer identified, the action taken to correct the errors, the effective date of the correction, and contact information, including a telephone number, for further assistance.
(2) Requesting information from borrower. A servicer may request supporting documentation from a borrower in connection with the investigation of an asserted error, but may not:
(i) Require a borrower to provide such information as a condition of investigating an asserted error; or
(ii) Determine that no error occurred because the borrower failed to provide any requested information without conducting a reasonable investigation pursuant to paragraph (e)(1)(i)(B) of this section.
(3) Time limits. (i) In general. A servicer must comply with the requirements of paragraph (e)(1) of this section:
(A) Not later than seven days (excluding legal public holidays, Saturdays, and Sundays) after the servicer receives the notice of error for errors asserted under paragraph (b)(6) of this section.
(B) Prior to the date of a foreclosure sale or within 30 days (excluding legal public holidays, Saturdays, and Sundays) after the servicer receives the notice of error, whichever is earlier, for errors asserted under paragraphs (b)(9) and (10) of this section.
(C) For all other asserted errors, not later than 30 days (excluding legal public holidays, Saturdays, and Sundays) after the servicer receives the applicable notice of error.
(ii) Extension of time limit. For asserted errors governed by the time limit set forth in paragraph (e)(3)(i)(C) of this section, a servicer may extend the time period for responding by an additional 15 days (excluding legal public holidays, Saturdays, and Sundays) if, before the end of the 30-day period, the servicer notifies the borrower of the extension and the reasons for the extension in writing. A servicer may not extend the time period for responding to errors asserted under paragraph (b)(6), (9), or (10) of this section.
(4) Copies of documentation. A servicer shall provide to the borrower, at no charge, copies of documents and information relied upon by the servicer in making its determination that no error occurred within 15 days (excluding legal public holidays, Saturdays, and Sundays) of receiving the borrower's request for such documents. A servicer is not required to provide documents relied upon that constitute confidential, proprietary or privileged information. If a servicer withholds documents relied upon because it has determined that such documents constitute confidential, proprietary or privileged information, the servicer must notify the borrower of its determination in writing within 15 days (excluding legal public holidays, Saturdays, and Sundays) of receipt of the borrower's request for such documents.
(f) Alternative compliance. (1) Early correction. A servicer is not required to comply with paragraphs (d) and (e) of this section if the servicer corrects the error or errors asserted by the borrower and notifies the borrower of that correction in writing within five days (excluding legal public holidays, Saturdays, and Sundays) of receiving the notice of error.
(2) Error asserted before foreclosure sale. A servicer is not required to comply with the requirements of paragraphs (d) and (e) of this section for errors asserted under paragraph (b)(9) or (10) of this section if the servicer receives the applicable notice of an error seven or fewer days before a foreclosure sale. For any such notice of error, a servicer shall make a good faith attempt to respond to the borrower, orally or in writing, and either correct the error or state the reason the servicer has determined that no error has occurred.
(g) Requirements not applicable. (1) In general. A servicer is not required to comply with the requirements of paragraphs (d), (e) and (i) of this section if the servicer reasonably determines that any of the following apply:
(i) Duplicative notice of error. The asserted error is substantially the same as an error previously asserted by the borrower for which the servicer has previously complied with its obligation to respond pursuant to paragraphs (d) and (e) of this section, unless the borrower provides new and material information to support the asserted error. New and material information means information that was not reviewed by the servicer in connection with investigating a prior notice of the same error and is reasonably likely to change the servicer's prior determination about the error.
(ii) Overbroad notice of error. The notice of error is overbroad. A notice of error is overbroad if the servicer cannot reasonably determine from the notice of error the specific error that the borrower asserts has occurred on a borrower's account. To the extent a servicer can reasonably identify a valid assertion of an error in a notice of error that is otherwise overbroad, the servicer shall comply with the requirements of paragraphs (d), (e) and (i) of this section with respect to that asserted error.
(iii) Untimely notice of error. A notice of error is delivered to the servicer more than one year after:
(A) Servicing for the mortgage loan that is the subject of the asserted error was transferred from the servicer receiving the notice of error to a transferee servicer; or
(B) The mortgage loan is discharged.
(2) Notice to borrower. If a servicer determines that, pursuant to this paragraph (g), the servicer is not required to comply with the requirements of paragraphs (d), (e), and (i) of this section, the servicer shall notify the borrower of its determination in writing not later than five days (excluding legal public holidays, Saturdays, and Sundays) after making such determination. The notice to the borrower shall set forth the basis under paragraph (g)(1) of this section upon which the servicer has made such determination.
(h) Payment requirements prohibited. A servicer shall not charge a fee, or require a borrower to make any payment that may be owed on a borrower's account, as a condition of responding to a notice of error.
(i) Effect on servicer remedies. (1) Adverse information. After receipt of a notice of error, a servicer may not, for 60 days, furnish adverse information to any consumer reporting agency regarding any payment that is the subject of the notice of error.
(2) Remedies permitted. Except as set forth in this section with respect to an assertion of error under paragraph (b)(9) or (10) of this section, nothing in this section shall limit or restrict a lender or servicer from pursuing any remedy it has under applicable law, including initiating foreclosure or proceeding with a foreclosure sale.
1. Borrower's representative. A notice of error is submitted by a borrower if the notice of error is submitted by an agent of the borrower. A servicer may undertake reasonable procedures to determine if a person that claims to be an agent of a borrower has authority from the borrower to act on the borrower's behalf, for example, by requiring that a person that claims to be an agent of the borrower provide documentation from the borrower stating that the purported agent is acting on the borrower's behalf. Upon receipt of such documentation, the servicer shall treat the notice of error as having been submitted by the borrower.
2. Information request. A servicer should not rely solely on the borrower's description of a submission to determine whether the submission constitutes a notice of error under § 1024.35(a), an information request under § 1024.36(a), or both. For example, a borrower may submit a letter that claims to be a "Notice of Error" that indicates that the borrower wants to receive the information set forth in an annual escrow account statement and asserts an error for the servicer's failure to provide the borrower an annual escrow statement. Such a letter may constitute an information request under § 1024.36(a) that triggers an obligation by the servicer to provide an annual escrow statement. A servicer should not rely on the borrower's characterization of the letter as a "Notice of Error," but must evaluate whether the letter fulfills the substantive requirements of a notice of error, information request, or both.
1. Noncovered errors. A servicer is not required to comply with § 1024.35(d), (e) and (i) with respect to a borrower's assertion of an error that is not defined as an error in § 1024.35(b). For example, the following are not errors for purposes of § 1024.35:
i. An error relating to the origination of a mortgage loan;
ii. An error relating to the underwriting of a mortgage loan;
iii. An error relating to a subsequent sale or securitization of a mortgage loan;
iv. An error relating to a determination to sell, assign, or transfer the servicing of a mortgage loan. However, an error relating to the failure to transfer accurately and timely information relating to the servicing of a borrower's mortgage loan account to a transferee servicer is an error for purposes of § 1024.35.
2. Unreasonable basis. For purposes of § 1024.35(b)(5), a servicer lacks a reasonable basis to impose fees that are not bona fide, such as:
i. A late fee for a payment that was not late;
ii. A charge imposed by a service provider for a service that was not actually rendered;
iii. A default property management fee for borrowers that are not in a delinquency status that would justify the charge; or
iv. A charge for force-placed insurance in a circumstance not permitted by § 1024.37.
1. Exclusive address not required. A servicer is not required to designate a specific address that a borrower must use to assert an error. If a servicer does not designate a specific address that a borrower must use to assert an error, a servicer must respond to a notice of error received by any office of the servicer.
2. Notice of an exclusive address. A notice establishing an address that a borrower must use to assert an error may be included with a different disclosure, such as a notice of transfer. The notice is subject to the clear and conspicuous requirement in § 1024.32(a)(1). If a servicer establishes an address that a borrower must use to assert an error, a servicer must provide that address to the borrower in the following contexts:
i. The written notice designating the specific address, required pursuant to § 1024.35(c) and § 1024.36(b).
ii. Any periodic statement or coupon book required pursuant to 12 CFR 1026.41.
iii. Any website the servicer maintains in connection with the servicing of the loan.
iv. Any notice required pursuant to §§ 1024.39 or .41 that includes contact information for assistance.
3. Multiple offices. A servicer may designate multiple office addresses for receiving notices of errors. However, a servicer is required to comply with the requirements of § 1024.35 with respect to a notice of error received at any such designated address regardless of whether that specific address was provided to a specific borrower asserting an error. For example, a servicer may designate an address to receive notices of error for borrowers located in California and a separate address to receive notices of errors for borrowers located in Texas. If a borrower located in California asserts an error through the address used by the servicer for borrowers located in Texas, the servicer is still considered to have received a notice of error and must comply with the requirements of § 1024.35.
4. Internet intake of notices of error. A servicer may, but need not, establish a process for receiving notices of error through email, website form, or other online intake methods. Any such online intake process shall be in addition to, and not in lieu of, any process for receiving notices of error by mail. The process or processes established by the servicer for receiving notices of error through an online intake method shall be the exclusive online intake process or processes for receiving notices of error. A servicer is not required to provide a separate notice to a borrower to establish a specific online intake process as an exclusive online process for receiving such notices of error.
1. Notices alleging multiple errors; separate responses permitted. A servicer may respond to a notice of error that alleges multiple errors through either a single response or separate responses that address each asserted error.
1. Different or additional errors; separate responses permitted. A servicer may provide the response required by § 1024.35(e)(1)(ii) for different or additional errors identified by the servicer in the same notice that responds to errors asserted by the borrower pursuant to § 1024.35(e)(1)(i) or in a separate response that addresses the different or additional errors identified by the servicer.
1. Foreclosure sale timing. If a servicer cannot comply with its obligations pursuant to § 1024.35(e) by the earlier of a foreclosure sale or 30 days after receipt of the notice of error, a servicer may cancel or postpone a foreclosure sale, in which case the servicer would meet the time limit in § 1024.35(e)(3)(i)(B) by complying with the requirements of § 1024.35(e) before the earlier of 30 days after receipt of the notice of error (excluding legal public holidays, Saturdays, and Sundays) or the date of the rescheduled foreclosure sale.
1. Notices alleging multiple errors; extension of time. A servicer may treat a notice of error that alleges multiple errors as separate notices of error and may extend the time period for responding to each asserted error for which an extension is permissible under § 1024.35(e)(3)(ii).
1. Types of documents to be provided. A servicer is required to provide only those documents actually relied upon by the servicer to determine that no error occurred. Such documents may include documents reflecting information entered in a servicer's collection system. For example, in response to an asserted error regarding payment allocation, a servicer may provide a printed screen-capture showing amounts credited to principal, interest, escrow, or other charges in the servicer's system for the borrower's mortgage loan account.
1. New and material information. A dispute between a borrower and a servicer with respect to whether information was previously reviewed by a servicer or with respect to whether a servicer properly determined that information reviewed was not material to its determination of the existence of an error, does not itself constitute new and material information.
1. Examples of overbroad notices of error. The following are examples of notices of error that are overbroad:
i. Assertions of errors regarding substantially all aspects of a mortgage loan, including errors relating to all aspects of mortgage origination, mortgage servicing, and foreclosure, as well as errors relating to the crediting of substantially every borrower payment and escrow account transaction;
ii. Assertions of errors in the form of a judicial action complaint, subpoena, or discovery request that purports to require servicers to respond to each numbered paragraph; and
iii. Assertions of errors in a form that is not reasonably understandable or is included with voluminous tangential discussion or requests for information, such that a servicer cannot reasonably identify from the notice of error any error for which § 1024.35 requires a response.
1. Borrower obligation to make payments. Section 1024.35(h) prohibits a servicer from requiring a borrower to make a payment that may be owed on a borrower's account as a prerequisite to investigating or responding to a notice of error submitted by a borrower, but does not alter or otherwise affect a borrower's obligation to make payments owed pursuant to the terms of a mortgage loan. For example, if a borrower makes a monthly payment in February for a mortgage loan, but asserts an error relating to the servicer's acceptance of the February payment, § 1024.35(h) does not alter a borrower's obligation to make a monthly payment that the borrower owes for March. A servicer, however, may not require that a borrower make the March payment as a condition for complying with its obligations under § 1024.35 with respect to the notice of error on the February payment.