In Moore v. Wells Fargo Bank, N.A., No. 18-1564 (7th Cir. Nov. 7, 2018), the mortgagor defaulted on two separate loan modifications. Following the second default the mortgagee filed for judicial foreclosure. After foreclosure judgment was entered and shortly before the foreclosure sale of the property was about to occur, the mortgagor through his attorney sent the servicer a qualified written request for information under RESPA, asking for various information concerning the loan and the prior loan modifications. Two days prior to the end of the deadline for the servicer to respond to the qualified written request, the mortgagor filed a federal complaint against the servicer alleging the servicer violated section 2605(e) of RESPA because it failed to provide the information requested. The servicer subsequent to the filing of the federal case, timely responded to the qualified written request. However, the mortgagor through his attorney sent the servicer a letter claiming the servicer’s response violated RESPA because it was incomplete and did not answer all the mortgagor’s questions.
The district court granted summary judgment to the servicer finding that the servicer did not violate RESPA. The district court also held that even if the servicer had failed to respond to all of the mortgagor’s questions there was still no violation of RESPA because such failure caused no damage. The mortgagor appealed to the Seventh Circuit.
On appeal, on the issue of damages, the Seventh Circuit rejected the mortgagor’s argument that the amount he paid to his attorney (to make the qualified written request or) to send a letter to the servicer, to complain of the servicer’s violation of RESPA for failing to answer all the requests, constituted actual damages for the purposes of RESPA. The appellate court explained that allowing the attorney’s fees to constitute the requisite actual damage element for a RESPA claim would “allow the borrower to create a RESPA claim that pulls itself up by its own bootstraps.” In other words, it would allow the mortgagor to create the required element of actual damages simply by using an attorney to communicate with the servicer. The appellate court further stated that allowing the attorney’s fees to constitute the actual damage element, would make the attorney fee provision allowed under section 2605(f)(3) superfluous, and such result would be unwarranted interpretation of RESPA. Accordingly, the Seventh Circuit held that attorney’s fees do not satisfy the actual damage element necessary for brining RESPA claim.
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