4th Circuit reviews whether borrowers’ letters are QWRs under REPSA

Courts Appellate Fourth Circuit Mortgages Qualified Written Request RESPA Regulation X Consumer Finance

On February 22, the U.S. Court of Appeals for the Fourth Circuit affirmed in part and reversed in part a district court’s dismissal of claims related to whether letters sent by plaintiff borrowers to a defendant loan servicer constituted qualified written requests (QWRs) under RESPA or Regulation X that would require the defendant to stop sending adverse information about accounts to credit reporting agencies. According to the opinion, one of the plaintiffs wrote to the defendant asking to have his records corrected after noticing his credit reports reflected purported overdue home loan payments that were allegedly affecting his employment after his employer expressed concerns about the credit report. The plaintiff noted a discrepancy between the amount he was allegedly behind on his mortgage payment and included a copy of the credit report his employer received, his account number, the ID number of the agent with whom he spoke on the phone, and requested that the error be corrected. However, the plaintiff alleged that the defendant continued to report adverse loan information. The other named plaintiff allegedly fell behind on her loan payments, and the defendant began reporting adverse information to the credit reporting agencies. She later applied for a loan modification, which was not finalized due to the existence of a lien by a solar panel company. The plaintiff sent a letter to the defendant challenging the existence of “title issues” and asked for her dispute to be investigated and corrected. The parties ultimately finalized a loan modification, but in the interim, the defendant continued reporting adverse information. The plaintiffs filed a putative class action alleging that despite sending QWRs, the defendant continued to report adverse information on their loans to credit reporting agencies; however, the district court dismissed the claims.

On appeal, the 4th Circuit reversed the district court’s dismissal of the first plaintiff’s claim, holding that the plaintiff’s letter was a QWR subject to RESPA because it contained sufficient details to identify his account and indicate why he believed the credit reporting was in error. In particular, the court noted that the letter constituted a QWR because it did not rely solely on the alleged phone call “as the basis for the description of the problem,” but also detailed conflicting balance information received from the defendant and the credit reporting service. The dissenting judge wrote that this plaintiff’s letter was not a QWR because it failed to identify the possible error and did not provide a statement of reasons for believing the unidentified error existed.

With respect to the other named plaintiff’s claim, the court affirmed dismissal because the letter did not qualify as a QWR. The court explained that the content of the plaintiff’s letter failed to satisfy the requirements of a valid QWR, finding that “correspondence limited to the dispute of contractual issues that do not relate to the servicing of the loan, such as loan modification applications, do not qualify as QWRs.”