'Qualified Written Request' Under RESPA – No 'Magic' Words, But The Right Questions Must Be Asked

For the first time, the federal Court of Appeals for the Ninth Circuit recently opined on what constitutes a "qualified written request" under the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. Section 2605(e), in Medrano et al. v. Flagstar Bank, FSB et al., 2012 U.S. App. LEXIS 25274 (9th Cir. Dec. 11, 2012). While the Court held that there are no "magic" words in order for a written request to be deemed a Qualified Written Request (QWR) under RESPA, which would trigger a mortgage servicer's obligation to respond, in Medrano, the Court sided with the mortgage servicer nonetheless because the borrower's letters did not raise the appropriate issues necessary for the letters to become QWRs.

Section 2605(e) requires a mortgage loan servicer, upon receipt of a QWR from a borrower, to: (a) acknowledge the QWR within a certain number of days, and (b) make appropriate corrections or respond with a written explanation of clarification that includes specific certain information. 12 U.S.C. §§ 2605(e)(1)(A) & (e)(2). A QWR is defined in the statute as "a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that,"

(i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and

(ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.

Id. § 2605(e)(1)(B). Failure to adhere to these requirements may subject the servicer to liability. Id. § 2605(f).

In Medrano, the borrowers purchased a home, and entered into a home loan agreement, which was serviced by Flagstar. The borrowers' monthly loan payment included installments of principal and interest, as well as escrow installments for property taxes and insurance. Subsequently, Flagstar notified the borrowers that their escrow account had insufficient funds, and required the borrowers to increase their monthly payment from $1,917.68 to $2,676.08. Flagstar also gave the borrowers an option to make a one-time lump payment to cover the deficiency. In challenging the increased installment amount, the borrowers' lawyer sent three letters to Flagstar, including to Flagstar's counsel, stating that the increase in payment was invalid because the borrowers' broker previously advised them that their installments would not exceed $1,900 per month...