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Case Law


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CFPB helps Virginia mortgagor win RESPA appeal

Posted Date: Monday, January 18, 2021

A Virginia mortgagor filed a class action RESPA lawsuit against his servicer’s successor-in-interest related to the successor’s failure to timely pay city property tax from funds deposited into the escrow account. 

A federal court granted the successor’s motion to dismiss. 

However, the Fourth Circuit Court of Appeals recently reversed the lower court’s decision after the Consumer Financial Protection Bureau filed an amicus brief in support of the appellant. Read on for details.

Case Law

Co-marketing scheme alleged in Maryland class action lawsuit

Posted Date: Thursday, January 14, 2021

A federal judge recently denied a lender’s motion to dismiss a class action lawsuit alleging a kickback scheme between a bank and a title company resulted in borrowers paying inflated settlement fees.

The plaintiffs claimed the lender made illegal referrals to a title company for title and settlement services, and the title company laundered payments to the bank through third-party marketing companies.

The borrowers argued the alleged kickbacks violated RESPA. Read on for details.

Case Law

Maryland judge rules class action kickback suit may proceed

Posted Date: Monday, January 11, 2021

A group of Maryland borrowers filed a class action lawsuit alleging their servicer engaged in an illegal kickback scheme with a title company.

The defendant filed a motion to dismiss, claiming the plaintiffs do not sufficiently allege the servicer was not in RESPA’s safe harbor provisions. The servicer also claimed the RESPA claims are time-barred and the plaintiffs did not prove actual injury.

Read on for highlights of the judge’s ruling.

Case Law

Massachusetts borrower sues for RESPA after mortgage scam

Posted Date: Thursday, January 7, 2021
A Massachusetts borrower who fell behind on his loan payments after falling victim to a mortgage scam claimed his servicer failed to fully respond to his notice of errors and requests for information on why his loan modification was denied.

The servicer argued the case should be dismissed because the requested information was overly broad and unduly burdensome.

Read on to see why a magistrate judge has recommended the case move forward.

Case Law

Seila Law loses CID fight in constitutionality case

Posted Date: Monday, January 4, 2021

The Ninth Circuit Court of Appeals has determined a civil investigative demand (CID) issued by the Consumer Financial Protection Bureau (CFPB) against a California law firm is still valid – despite the fact that the agency was unconstitutionally structured. 

The circuit court held CFPB Director Kathy Kraninger’s ratification of the CID remedies any constitutional injury that Seila Law may have suffered. 

Read on for details from the Ninth Circuit’s recent ruling.

Case Law

DOJ files race discrimination lawsuit

Posted Date: Monday, January 4, 2021

The Department of Justice (DOJ) has filed a lawsuit alleging an Oklahoma housing authority violated the Fair Housing Act and Title VI of the Civil Rights Act of 1964 when they denied housing to an African-American applicant and her young child because of their race. 

The housing authority receives funds from the Department of Housing and Urban Development (HUD).

Read on for details from the DOJ’s suit and reaction from HUD.

Case Law

California couple files TRID lawsuit after foreclosure

Posted Date: Friday, December 18, 2020
A California couple sued their servicer and Freddie Mac for allegedly failing to respond to their written requests for information about the mortgage loan’s payoff amount and new owner.

As a result, the borrowers claimed they sustained actual damages, including “missing work” and “being foreclosed upon.”

The servicer asked that the TRID lawsuit be dismissed for failure to state a claim. Read on to see a magistrate judge’s recommendations in the case.
Case Law

DOJ files race case against Alabama housing authority

Posted Date: Thursday, December 17, 2020

The Department of Justice (DOJ) has filed a lawsuit alleging an Alabama housing authority violated the Fair Housing Act by intentionally discriminating based on race or color against applicants for housing.

The housing authority denied African American the opportunity to live in overwhelmingly white housing complexes, while steering white applicants away from properties whose residents were predominantly African American, according to the DOJ’s lawsuit. Read on for details.

Case Law

DOJ files 20th suit alleging sexual harassment in housing

Posted Date: Monday, December 14, 2020
The Department of Justice (DOJ) has filed a lawsuit alleging a Massachusetts property manager violated the Fair Housing Act by subjecting female tenants to sexual harassment and unwelcome sexual contact.

The lawsuit is the 20th to be filed since the launch of the DOJ’s Sexual Harassment in Housing Initiative. The initiative is gaining momentum due to the COVID-19 crisis.

Read on for details from the DOJ.
Case Law

CFPB sues online lender

Posted Date: Thursday, December 10, 2020

The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against an Oakland, Calif.-based lender for allegedly violating the Military Lending Act (MLA) while extending credit.

The action is part of a broader bureau sweep of investigations of multiple lenders that may be violating the MLA, which puts in place protections in connection with extensions of consumer credit for active duty servicemembers and their dependents.

Read on for more from the CFPB.

Case Law
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“The sale of a loan after the original funding of the loan at settlement is a secondary market transaction. Such a sale is exempt from RESPA coverage as a secondary market transaction."

more RESPA Tips »


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RESPA News Monthly
January 2021

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12 USC Section 2605 or Section 6 is titled Servicing of mortgage loans and administration of escrow accounts. It pertains to qualified written requests, notices of transfer of servicing and the administration of escrow accounts.
An arrangement that involves a person who is in a position to refer business as part of a real estate settlement service and who has an interest in a settlement services provider.

In the arrangement, the person, who has either an affiliate relationship with or a direct or beneficial ownership interest of more than one percent in a settlement services provider, directly or indirectly refers business to that provider or influences a consumer to select that provider.
An arrangement that involves a person who is in a position to refer business as part of a real estate settlement service and who has an interest in a settlement services provider.

In the arrangement, the person, who has either an affiliate relationship with or a direct or beneficial ownership interest of more than one percent in a settlement services provider, directly or indirectly refers business to that provider or influences a consumer to select that provider.
A mortgage disclosure that lists all estimated charges and fees associated with your loan. In addition to fees and charges, it will list your loan amount, mortgage rate, loan term and estimated monthly payment. Your escrows due at closing for insurance and taxes will also be outlined. Mortgage lenders are legally required to provide a GFE within three days of receiving your application.
A mortgage disclosure that lists all estimated charges and fees associated with your loan. In addition to fees and charges, it will list your loan amount, mortgage rate, loan term and estimated monthly payment. Your escrows due at closing for insurance and taxes will also be outlined. Mortgage lenders are legally required to provide a GFE within three days of receiving your application.
Under RESPA Section 2605(e)(1)(B), a qualified written request is a written correspondence that includes: 1) the name and account of the borrower, or has enough information to allow the servicer identify that information; and 2) a statement of the reasons for the belief of the borrower that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.

A QWR cannot be written on a payment coupon or other payment medium supplied by the servicer.
Under RESPA Section 2605(e)(1)(B), a qualified written request is a written correspondence that includes: 1) the name and account of the borrower, or has enough information to allow the servicer identify that information; and 2) a statement of the reasons for the belief of the borrower that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.

A QWR cannot be written on a payment coupon or other payment medium supplied by the servicer.
Under Regulation X, required use means a situation in which a person must use a particular provider of a settlement service in order to have access to some distinct service or property, and the person will pay for the settlement service of the particular provider or will pay a charge attributable, in whole or in part, to the settlement service.

However, the offering of a package or (combination of settlement services) or the offering of discounts or rebates to consumers for the purchase of multiple settlement services does not constitute a required use. Any package or discount must be optional to the purchaser. The discount must be a true discount below the prices that are otherwise generally
12 USC Section 2607 or Section 8 is titled Prohibition against kickbacks and unearned fees. It prohibits fees or kickbacks for referrals. It also prohibits accepting a portion of fee except for services actually performed. Section 8 provides information on what payments are allowed under this section and the penalties for violations.
12 USC Section 2608 or Section 9 is titled Title companies; liability of seller. This section states that a seller cannot require, as a condition of selling the property, that title insurance be purchased by any particular title company. Section 9 states that a seller who violates this section is liable to the buyer for treble damages.
12 USC Section 2609 or Section 10 is titled Limitation on requirement of advance deposits in escrow accounts. It governs escrow accounts including notifications and statements to borrowers. Section 10 also sets out penalties for those who violate the section.
RESPA Section 3 provides that a thing of value includes any payment, advance, funds, loan, service or other consideration

Regulation X says thing of value includes: monies, things, discounts, salaries, commissions, fees, duplicate payments of a charge, stock, dividends, distributions of partnership profits, franchise royalties, credits representing monies that may be paid at a future date, the opportunity to participate in a money-making program, retained or increased earnings, increased equity in a parent or subsidiary entity, special bank deposits or accounts, special or unusual banking terms, services of all types at special or free rates, sales or rentals at special prices or rates, lease or rental payments based in whole or in part on the amount of business referred, trips and payment of another person’s expenses or reduction in credit against an existing obligation.
A form used by a settlement or closing agent itemizing all charges imposed on a borrower and seller in a real estate transaction. This form represents the closing transaction and provides each party with a complete list of incoming and outgoing funds. RESPA requires the HUD-1 to be used as the standard real estate settlement form in all transactions in the U.S. involving federally related mortgage loans.
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