Alert January 10, 2013

Ninth Circuit Holds That Letters Challenging Loan’s Validity Are Not Qualified Written Requests Under RESPA

The United States Court of Appeals for the Ninth Circuit has affirmed the dismissal of a claim under the Real Estate Settlement Procedures Act by borrowers alleging that letters from the borrowers challenging the monthly payment due on their loan were “qualified written requests” triggering the servicer’s duty to respond under RESPA, RESPA provides an action for damages where a servicer fails to respond to certain types of inquiries from borrowers relating to the servicing of their loans, inquiries known as “qualified written requests.”  The lower court held that because the letters did not seek information relating to the servicing of the loan, but rather challenged the loan’s terms, they did not constitute qualified written requests. Plaintiff appealed.

The Ninth Circuit considered both the statutory definition of “qualified written request” and the broader policy objectives underlying RESPA, which Congress intended to serve consumer protection purposes. Affirming the dismissal, the Ninth Circuit focused on the statute’s requirement that to qualify as a “qualified written request,” a letter must request information relating to the servicing of a loan. Excluded from this definition would be requests for information relating to the “transactions and circumstances surrounding a loan’s origination.” The Ninth Circuit’s ruling follows the reasoning adopted by the Seventh Circuit when it considered this issue in Catalan v. GMAC Mortgage Corp., 629 F.3d 676 (7th Cir. 2011). Together, these opinions provide a strong precedent establishing that RESPA does not provide a means of challenging the validity of an underlying debt or the specific terms of a loan agreement.