Florida Federal Court Tightens Lawsuits Over Qualified Written Requests (QWR) for Information under Regulation X/RESPA

In Russell v. Nationstar Mortgage, LLC, No. 14-61977-CIV, 2015 WL 5029346, at *5 (S.D. Fla. Aug. 26, 2015), the Southern District of Florida federal court put an end to lawsuits brought by consumers against lenders regarding Regulation X/RESPA requests; here a life of loan accounting.  In such, a borrower would hire a lawyer who sent out an extensive list of requests for loan information.  The lawyer would then send out another later some time later that the answers were not not compliant with Regulation X, and sue for actual damages in the amount of the postage for the follow up letter, and of course, attorney’s fees. 

Nationstar here responded to all letters send by borrower’s attorney, including information it had in its records from 2012 to present; not including the prior servicer records in response to the life of loan accounting request.  

Here, the borrower decided to stop making payments on the loan until the bank complied with the QWR requests to borrower’s satisfaction.  The Court found otherwise; that borrower decided on their own to stop making payments and any resulting damages from ceasing payments were the borrower’s own doing.

The Court further found that there was no systematic noncompliance here as Nationstar responded to every letter borrower and counsel sent.  Further, the loan was current when the QWRs began, and none of the prior accounting was salient to the QWR request as Nationstar was not asking for any money at that time from borrower and no dispute that the account was current.  In other words, the requests were frivolous in nature as they were asking for an accounting for the life of the loan when there was no dispute to begin with to warrant and accounting as the loan was current (and the borrower decided to stop making payments only after that).  It appeared that the Court felt that the accounting would yield no relevant information other than a loophole for borrower to try to sue for alleged damages over.  Borrower also made ludicrous claims of emotional distress and such which the Court quickly rejected.

Moral of the story- don’t try to game the system and use technicalities that some foreclosure defense lawyers spew saying what you want to hear.  This borrower went from current on their loan to behind (and had to pay back the amounts due with penalties/fees/interest); and all they would have won was their attorney being paid and the cost of postage. 

Another Bankruptcy Court Opinion States Surrender in BankruptcyPrevents Foreclosure Defense

As noted in a previous post here, bankruptcy courts in Florida have been holding that when a homeowner chooses to surrender their property in a Chapter 7 bankruptcy, accepting the benefit of a waiver of the personal liability under the note, that the homeowner gives up the right to later defend the foreclosure case.

Another bankruptcy court has issued a similar opinion and holding.  In re Calzadilla, 14-11318-RAM, 25 Fla. L. Weekly Fed. B254a (Bankr. S.D. Fla. June 16, 2015). 

The debtor in this case proposed a chapter 13 plan which required the parties would engage in mortgage modification mediation and if mediation were unsuccessful, the debtor would “surrender” the real property.  Then after an impasse at mediation, the debtor moved to amend the plan to provide for treatment of the property outside the plan and stay relief. The lender objected in part to the proposed amendment since the court’s mortgage modification mediation procedures required “surrender.” 

Therefore, the lender requested language be included in the amended plan that the debtor may not contest the lender’s right to complete its foreclosure.  The debtor opposed adding such language. 

The Court denied the debtors’ motion, and held that, “the Court’s MMM Procedures explicitly require ‘surrender’ and ‘surrender’ means that debtors cannot thereafter take any overt action to defend or impede the foreclosure.”

This ruling is consistent with a growing body of case law that applies a common sense approach to the term “surrender” which prevents foreclosure defense. See e.g. In re Failla, 529 B.R. 786 (Bankr. S.D. Fla. 2014) (holding that debtors’ defense of foreclosure action did “not comport with the definition of ‘surrender’”),In re Metzler, 2015 WL 2330131 (Bankr. M.D. Fla., May 13, 2015); In re Trout, Case No. 13-39869 (S.D. Fla. 2014).