The View from Section 2605(g): RESPA’s Causation Condition

31 Min Read By: Amir Shachmurove


  • Over the last three decades, federal courts have grafted a causation requirement into section 2605 of the Real Estate Settlement Procedures Act.
  • Neither unprecedented nor farcical, this reading dovetails with the judiciary’s instinctual disinclination to allow for the imposition of liability in the absence of some causal link.
  • This regularly overlooked jurisprudential approach presents defendants and plaintiffs with both risks and opportunities when dealing with claims under section 2605(g).

I. Introduction[1]

Since President Gerald Ford signed it into law on December 22, 1974, the Real Estate Settlement Procedures Act (RESPA)[2] has been amended to cover many diverse yet related “real estate” subjects. In its present iteration, only sections 2605(g) and 2609 deal with mortgage escrow accounts, with much of RESPA’s escrow-themed jurisprudence centering on the former.[3] Despite its sparsity,[4] this precedent’s perusal reveals the popularity of a peculiar interpretation of section 2605(g) within the federal judiciary[5]—namely, “[]though . . . [it] does not explicitly set this out as a pleading standard,” section 2605(f) impliedly requires a showing of pecuniary damages in order to state a claim under section 2605’s every subpart, including its escrow-centric section 2605(g).[6] As a result of this extrapolation’s increasing sway, another weapon for use by the many subject to RESPA’s positive commands and plain prohibitions has been forged, one too often unexploited by defendants and forgotten by plaintiffs.

II. Snapshots of RESPA in Operation[7]

A. Forgotten Obligations

Organized under the laws of the state of Maryland in 1995, New Century Financial Corporation (New Century) sited its headquarters in Irvine, California. In 2004, New Century converted itself into a real estate investment trust; in 2006, it ranked second only to HSBC Finance Corporation in the issuance of subprime mortgages. By the spring of 2006, this phoenix’s death spiral had commenced, culminating in its filing of Chapter 11 bankruptcy on April 2, 2007. Among one portfolio of assets subsequently sold by New Century’s bankruptcy trustee sat an outstanding mortgage owed by Demonfort and Leandra Carter (Carters, collectively).

In the months after this interest’s acquisition, this mortgage’s new owner unwittingly repeated its predecessors’ blunders. Most notably, it too neglected to supply the Carters with notice of all changes in the identities of the loan’s servicers or of the trustees authorized to commence a nonjudicial foreclosure. In so doing, as the Carters alleged, their debt’s most recent possessor had clearly violated section 2605(b). Soon after a court so concluded, however, a singular realization upended proceedings: for all their efforts, the Carters would never be able to adduce proof of a single computable injury or monetizable harm.

B. Misplaced Letters

A decade later, due to a married couple’s erratic payment history, another mortgagee exercised its right under a duly executed deed of trust (DOT) to mandate the creation and upkeep of a mortgage escrow account. At the same time, this entity promised the mortgagors that it would make timely disbursements from this regularly replenished account for the payment of their mortgage insurance. Pursuant to these representations, first the DOT’s two holders and then the obligation’s servicer diligently sent the necessary sums to a small insurance company headquartered in the Virginian swamplands, month after month and year after year. As the servicer likely knew, section 2605(g) required no less.

This process broke down in the course of one muggy, three-month stretch. Beginning in June of 2016, the property’s longtime insurer sent renewal notices to the servicer warning of the policy’s imminent expiration in August. Inexplicably, these missives failed to induce a response, whether an acknowledgement of receipt or an application for the policy’s renewal, from the servicer’s appointed staff. Hence, once the deadline passed without receipt of a wired or mailed payment, the mortgagors’ insurance automatically lapsed.

Soon thereafter, a hurricane besieged the mortgagors’ ramshackle home, prompting the servicer first to discover the policy’s termination and then to respond in two conspicuous ways. Within days, it force-placed coverage, backdated to the former policy’s date of expiration, on the now-battered home; within weeks, it ordered its chosen adjustor to utilize the formula for reimbursement set out in the expired policy. Maybe inevitably, once this expert submitted his valuation, the mortgagors proffered their own, and the parties began feuding over manifold objects’ appropriate valuation. As these disagreements’ intractability spiked, the mortgagors, at their new lawyer’s behest, pondered the potential of a section 2605(g) claim.

III. Statutory Scheme

A. RESPA’s Origins and Objectives

In the 1950s, an increase in the settlement costs incurred by home purchasers first garnered a modicum of Congress’s attention.[8] Nevertheless, it took until 1969 for the rash of consumer complaints over these fees to prod a congressional subcommittee to more than perfunctorily wade into this fraught area of law and finance.[9] In the aftermath of the extensive public hearings that followed, Congress empowered the Secretary of the U.S. Department of Housing and Urban Development and the Administrator of Veterans Affairs to conduct an official study of settlement costs on certain government-insured loans[10] in section 701 of the Emergency Home Finance Act of 1970.[11] From the written peroration produced by these agencies came RESPA.[12]

Since its effective date of June 20, 1975,[13] RESPA has regulated the conduct of the varied participants in “the settlement process for residential real estate,”[14] governing this “narrow field of financial transactions” but affecting “a broad group of financial institutions.”[15] In relevant part, RESPA then defined, and still does, a real estate “settlement service” as “any service provided in connection with a real estate settlement, including, but not limited to” title searches, title insurance, attorney services, document preparation, credit reports, appraisals, property surveys, loan processing and underwriting, and the like,[16] relating to “a[ny] federally related mortgage loan,” itself an expressly delineated term.[17] From 1975 through today, RESPA has obligated the entities offering such services and dealing with such loans to deliver “greater and more timely information on the nature and costs of the settlement process” to consumers and to forsake the “abusive practices” blamed for “unnecessarily high settlement charges.”[18] A certain belief underlay, and still accounts for, these sections: “that those who pay settlement costs rarely understand them and have little ability to affect their imposition through consumer choice.”[19]

A similar view has always animated section 2609, one of RESPA’s original parts.[20] As its legislative record amply confirms, Congress crafted section 2609 to “attack[]” and “outlaw[]” some lenders’ practice of “maintaining an overlarge ‘cushion’ of borrowers’ tax and insurance premiums [in mortgage escrow accounts] to profit from the interest gained by investing it.”[21] Whatever their original defensibility, these accounts had “developed into a lucrative source of interest-bearing capital for mortgage lenders” in the decades since their emergence in the 1930s, a transformation little noticed, for good or ill, until the late 1960s.[22] At that point, and for years afterward, borrowers brought hundreds of suits to recoup their lost interest income or recover the profits that they believed lenders had so illicitly accumulated.[23] “[T]he consumer movement” had recently “singled out the escrow account for particular attention,” one knowledgeable observer reflected in 1972, “the probable result of a sense of frustration on the part of the average borrower and the deep-seated feeling that he[, she, or them] is being gypped and the industry is taking advantage of him [her, or them].”[24] Due to a surfeit of such unequivocally telling evidence, section 2609’s impetus and mark—“[t]he common practice of profiting by overcharging and investing escrow funds”—have never been in doubt.[25]

In 1991, Congress extended RESPA to the “servicing” of “federally related mortgage loans” with the enactment of section 2605.[26] It did so in response to a major study of mortgage loan servicing practices, conducted by the U.S. General Accounting Office, that collected a substantial number of consumer grievances regarding abusive practices by certain servicers.[27] In pained and thorough detail, testimonial after testimonial documented perpetual “mistakes in calculating escrow account payments, unresponsiveness to inquiries”, and failures “to make timely property tax and hazard insurance premium payments” as well as “to provide adequate notice of a mortgage loan servicing transfer.”[28] Other protests “pointed out that these errors . . . [could] potentially result in the imposition of late payment charges and payments to the wrong parties.”[29] These writers’ excoriations naturally fixated upon servicers of residential loans or mortgages, the typical point of contact for the average borrower.[30] To address these apprehensions, Congress opted to expansively define “servicing” for purposes of section 2605 as “receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan, including amounts for escrow accounts described in section [2609] . . . , and making the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the loan.”[31] As the practice of loan servicing by parties other than the original lender has become more commonplace, and as servicers’ ability to initiate foreclosures has been more firmly established,[32] section 2605’s prominence has mushroomed.

Cognizant of this history, courts tag RESPA in toto as a remedial consumer protection statute[33] and correspondingly construe its provisions.[34] Thus, because “[t]he express terms of RESPA clearly indicate that it is . . . a consumer protection statute,”[35] its every clause must be “read remedially . . . to further its goals of providing more information for consumers and preventing abusive practices by servicers.”[36] To these jurists, this view can (and often does) warrant capacious explications of RESPA’s scope and duties.[37] RESPA’s evolution into a “comprehensive law that covers virtually every loan secured by residential real property” by 1993[38] has only reinforced this interpretive predilection.

B. RESPA’s Escrow Provisions: Sections 2605 and 2609

RESPA imposes disparate duties on lenders and servicers with respect to mortgage escrow accounts. As to the former, it (1) limits the amount that lenders can require current or prospective borrowers to deposit into them, but (2) forces loan servicers (a) to deliver borrowers with account statements and notifications of shortage, and (b) to make timely payments from the escrow account for taxes, insurance premiums, and other charges in certain situations.[39] Applicable far beyond the date of the closing, the RESPA escrow provisions binding upon servicers appear in sections 2609 and 2605(g).[40]

Strictly tailored, section 2609 polices “when, what, and how much a servicer may collect from a borrower for deposit in an escrow account.”[41] In particular, it (1) prohibits the imposition of certain requirements on “the borrower or prospective borrower”;[42] (2) compels a servicer to “notify the borrower not less than annually of any shortage in the escrow account”;[43] and (3) enumerates a multitude of specifications as to escrow accounts’ initial and annual statements[44] whenever a lender forces a borrower to make advance deposits in a mortgage escrow account. By targeting these practices, section 2609 attempts to “relieve[] the home buyer of the burden of making advance deposits covering long periods of time, while [still] assuring lenders that these charges will be paid.”[45] As commonly parsed, however, this escrow provision awards no private cause of action, a conclusion[46] that has arguably limited its utility.[47]

In contrast, section 2605, which broadly focuses upon the servicing of mortgages, has long been held to provide exactly such a prerogative.[48] Among its various paragraphs, section 2605(g) alone “governs when a servicer is required to pay taxes and insurance premiums on a mortgaged property where there has been no escrow waiver.”[49] In accordance with this subsection, a servicer must “make payments from the escrow account for such taxes, insurance premiums, and other charges in a timely manner as such payments become due” so long as “the mortgage loan terms require the borrower to make payments to the servicer for deposit into an escrow account to assure payment of taxes, insurance premiums, and other charges with respect to the property.”[50] As the Consumer Financial Protection Bureau has advised, a servicer must make the payment required by section 2605(g) “on or before the deadline to avoid a penalty” and thereby escape liability for its trespass.[51]

C. RESPA’s Implicit Requirement: Section 2605(g)’s Causal Prerequisite

Bereft of any direction from RESPA itself, court after court has done the same, precisely as logic and practice compel: it has imported a causal prerequisite into section 2605’s every subparagraph, including section 2605(g). Textually, however, section 2605(f) expresses no such thing,[52] and neither section 2605(b) nor section 2605(g) speak as to causation.[53] Still, assuming section 2605’s three-year statute of limitations has not yet run,[54] a defendant can only be liable for “any actual damages to the borrower as a result of the failure” to comply with “any provision” of section 2605 per section 2605(f)(1)(A).[55] Having construed this text to render damages into “an essential element in pleading a RESPA claim,”[56] much precedent now expects a plaintiff to initially allege and later prove two verities when suing for a violation of section 2605:[57] (1) “pecuniary damages” (2) traceable to the defendant’s purported noncompliance with one of section 2605’s sundry provisions.[58]

With impressive rapidity, this dualistic construction led to the derivation of a newfangled pleading requirement for section 2605(g) claims. Simply put, an actual connecting link between quantifiable damages and that subsection’s breach must first be plausibly alleged and then competently evidenced for such a claim’s dismissal to be avoided under Federal Rules of Civil Procedure 12(b) and 56.[59] A plaintiff’s failure to specify a section 2605(g) violation and some measurable harm that directly flowed from that transgression will, in turn, ensure a section 2605(g) claim’s defeat,[61] as will reliance on “general allegations of harm”[62] or “conclusory statement[s] of law.”[63]

IV. Some Real-World Guidance for Defendants and Plaintiffs

Putting aside questions as to its objective cogency, section 2605(g)’s implied causal requirement presents defendants and plaintiffs with both peril and possibility.

For a defendant, its existence affords new means for beating back any claim founded on its purported contravention. The want of plausible allegations as to causation or to a distinct harm attributable to section 2605(g)’s breach, as determined by the standard set out in Bell Atlantic Corp. v. Twombly[64] and Ashcroft v. Iqbal,[65] demands the dismissal of any such cause of action even at the pleading stage, thus justifying an early motion to dismiss or for judgment on the pleadings—or notice of that probability before a suit’s commencement. After discovery’s end, the dearth of much more than a scintilla of competent evidence of either should lead to the same result if articulated in a short motion for summary judgment. Finally, purely as a practical matter, any RESPA-covered entity that promptly corrects any section 2605(g) violation and tenders the nonbreaching plaintiff with the same kind of insurance coverage as under the lapsed policy, and actually possesses and successfully introduces evidence of such pre-suit efforts into a case’s record before or during trial,[66] will find itself well-positioned to sidestep liability under section 2605(g). The reason is simple: if a defendant can prove that it thusly acted, its breach of section 2605(g) cannot have precipitated any cognizable harm. Based on section 2605’s prevailing interpretation, such a finding abrogates any claim under section 2605(g) as a matter of law.

Meanwhile, a plaintiff must prepare to rebuff such rejoinders from first light. At a minimum, he, she, or they must not scrimp on the fashioning and propounding of allegations that, taken as a whole, depict a plausible connection between section 2605(g)’s defiance and some ultimately measurable harm in framing every pleading. Obviously, if the breaching entity quickly recovered and arranged for coverage consistent with that previously furnished, likely doom would dog any such claim; after all, the nonexistence of a true injury is not something that can be pled away, only artfully obscured for a spell. Depending on the facts, a prescient plaintiff—one who anticipates this risk—can endeavor to minimize it by (1) credibly avowing their intent to obtain potentially more generous coverage than formerly imposed pre-suit, or by demonstrating that the servicer, whether directly or indirectly, had failed (2) either to obtain at least comparable coverage prior to the initiation of any lawsuit or the threat of litigation, or (3) to utilize the more beneficial matrix or algorithm set forth in the expired policy, as it may have promised.[67] For these plaintiffs, discovery must be dedicated to the gathering of evidence so substantiating from the mortgagors, breaching party, insurer, and, if necessary, an expert or two—more than a modicum necessary to dodge a section 2605(g) claim’s dismissal on the eve of trial. To summarize, in accordance with the federal judiciary’s preferred construction of section 2605, any plaintiff should be ready first to allege and subsequently to show how a breach of section 2605(g) engendered an actual injury, one preferably reducible to paper dollars and jingling cents, before docketing a single page. The judicial penchant for “interpret[ing] this [causal] requirement liberally” will surely ease this burden,[68] but cannot fully negate it.

Aside from making the aforementioned arrangements, a plaintiff’s only option is to dispute the propriety of this causal prerequisite’s imputation into section 2605’s silent text. Such a contention arguably accords with today’s “well-established principles of statutory construction,”[69] which decidedly bar any tinkering with a statute’s enacted language.[70] Yet, considering section 2605(f)’s highly redolent language and the judiciary’s longstanding rejection of this argument, its odds of success at trial or on appeal are vanishingly small.

V. Conclusion

In its current form, section 2605(g) lacks either a palpable ambiguity or a maddening ornateness. Rather, this subsection lays out duties, the disregard of which can trigger liability in relatively transparent prose.[71] No reference to causation graces its text, and no such clear demand appears in the overall statute of which it constitutes but a part. Perhaps made uncomfortable by the omission of this common statutory element, countless courts have nonetheless implanted it within section 2605 in general and section 2605(g) in particular. Notwithstanding this decision’s soundness, its present-day ascendency is an established fact, and until courts or Congress act, its propagation invites defendants to argue for the imputation of such a condition into RESPA’s as-yet-untouched sections—and perhaps other, still unaffected consumer protection statutes.

*Amir Shachmurove is an associate at Troutman Sanders LLP and is always reachable at [email protected]. As usual, the views expressed and the mistakes made herein are his alone and should be attributed to neither friend nor employer, past or present. Lastly, this article is for general information purposes and is not intended to be, and should not be taken as, legal advice.

[1] In this article, any reference to “section []” or “§ []” is to a provision of RESPA, as codified in 12 U.S.C. §§ 2601–2617.

[2] As typically defined, an “escrow account” is “a bank account, generally held in the name of the depositor and an escrow agent, that is returnable to the depositor or paid to a third person on the fulfillment of specified conditions.” Black’s Law Dictionary 22 (10th ed. 2014). In the RESPA context, and as used in this article, the term “escrow account” is synonymous with “impound account,” defined as “[a]n account of accumulated funds held by a lender for payment of taxes, insurance, or other periodic debts against real property.” Id.

[3] The judicial consensus that section 2609 does not allow for a private cause of action likely explains this distribution. See infra note 46 and accompanying text.

[4] Cf. Hyderi v. Wash. Mut. Bank, FA, 235 F.R.D. 390, 400 (N.D. Ill. 2006) (describing section 2605(g) as “a seldom-invoked provision of RESPA”).

[5] In this article, any reference to “court” or “courts” is to one or more federal trial and appellate courts, whether operating pursuant to Article I or Article III of the U.S. Constitution, unless otherwise noted.

[6]  Allen v. United Fin. Mortg. Corp., 660 F. Supp. 2d 1089, 1097 (N.D. Cal. 2009).

[7] The tales précised in this section come from publicly available sources. Some facts have nonetheless been altered for the sake of confidentiality and readability.

[8] George S. Mahaffey Jr., A Product of Compromise: Or Why Non-Pecuniary Damages Should Not Be Recoverable under Section 2605 of the Real Estate Settlement Procedures Act, 28 U. Dayton L. Rev. 1, 6 (2002).

[9] Diana Stoppello, Federal Regulation of Home Mortgage Settlement Costs: RESPA and Its Alternatives, 63 Minn. L. Rev. 368, 374 n.20 (1979).

[10] Mahaffey, supra note 8, at 7. The U.S. Department of Housing and Urban Development today bears much of the responsibility for RESPA’s implementation and enforcement. 12 U.S.C. § 2617. In addition, RESPA is effectuated by regulations, collectively known as Regulation X, promulgated by the Consumer Financial Protection Bureau. 12 C.F.R. §§ 1024.1 et seq.

[11] Pub. L. No. 91-351, 84 Stat. 450 (1970); P. Barron, Federal Regulation of Real Estate: The Real Estate Settlement Procedures Act 11 (1975).

[12] Michael Darrow, The Real Estate Settlement Procedures Act of 1974, as Amended in 1975, 5 U. Balt. L. Rev. 383, 383–86 (1976). With RESPA’s passage, “[h]omeownership” had finally become an “American dream” worthy of federal succor. Predatory Mortgage Lending: The Problem, Impact, and Response: Hearings Before the U.S. S. Comm. on Banking, Housing, and Urban Affairs, 107th Cong. 1 (2001) (statement of Sen. Paul S. Sarbanes, Chairman, S. Comm. on Banking, Housing, and Urban Affairs).

[13] Pub. L. No. 95-533, 88 Stat. 1724 (1974).

[14] 12 U.S.C. § 2601(b); Freeman v. Quicken Loans, Inc., 626 F.3d 799, 804 (5th Cir. 2010).

[15] Flagg v. Yonkers S&L Ass’n, 396 F.3d 178, 184 (2d Cir. 2005).

[16] 12 U.S.C. § 2602(3); 12 C.F.R. § 1024.2(b); H.R. Rep. No. 102-760, at 158 (1992). Somewhat helpfully, section 2602(3) includes a nonexhaustive list of “settlement services.” 12 U.S.C. § 2602(3); Bloom v. Martin, 77 F.3d 318, 321 (9th Cir. 1996).

[17] 12 U.S.C. § 2602(1); Wilson v. Bank of Am., N.A., 48 F. Supp. 3d 787, 796 (E.D. Pa. 2014); Moses v. Citicorp Mortg., 982 F. Supp. 897, 900 n.3 (E.D.N.Y. 1997). As applied, this term’s definition has two prongs. Knowles v. Bayview Loan Servicing, LLC (In re Knowles), 442 B.R. 150, 158 (B.A.P. 1st Cir. 2011).

[18] 12 U.S.C. § 2602(3); see also Sosa v. Chase Manhattan Mortg. Corp., 348 F.3d 979, 981 (11th Cir. 2003) (explicating RESPA’s purpose); United States v. Graham Mortg. Corp., 740 F.2d 414, 419-20 (6th Cir. 1984) (same).

[19] Charles Szypszak, Real Estate Records, the Captive Public, and Opportunities for the Public Good, 43 Gonz. L. Rev. 5, 19 (2007–08); see also, e.g., Wanger v. EMC Mortg. Corp., 127 Cal. Rptr. 2d 685, 689, 693 (Cal. Ct. App. 2002); see also, e.g., Cortez v. Keystone Bank, No. 98-2457, 2000 U.S. Dist. LEXIS 5705, at *30, 2000 WL 536666, at *10 (E.D. Pa. May 2, 2000) (“The principal purpose of RESPA is to protect home buyers from material nondisclosures in settlement statements and abusive practices in the settlement process.”).

[20] Seth M. Mott, Note, Tacking the Perplexing Sound of Statutory Silence: Why Courts Should Imply a Private Right of Action Under Section 10(a) of RESPA, 64 Wash. & Lee L. Rev. 1159, 1165 (2007).

[21] Iver Peterson, Padding in the Escrow Cushion, N.Y. Times, Feb. 24, 1991, at 1.

[22] Christopher L. Sagers, Note, An Implied Cause of Action under the Real Estate Settlement Procedures Act, 95 Mich. L. Rev. 1381, 1382 (1997); Thomas H. Broad, Comment, The Attack Upon the Tax and Insurance Escrow Accounts in Mortgages, 47 Temp. L.Q. 353, 352 (1974).

[23] Charles A. Pillsbury, Note, Lender Accountability and the Problem of Noninterest-Bearing Mortgage Escrow Account, 54 B.U. L. Rev. 516, 517 (1974).

[24] Robert E. Ulbricht, Impound Accounts and After, 28 Bus. Law. 203 (Nov. 1972).

[25] Mott, supra note 20, at 1166, 1168.

[26] Cranston-Gonzalez National Affordable Housing Act of 1990, Pub. L. No. 101-625, § 941, 104 Stat. 4079, 4405; 12 U.S.C. § 2602(1); see also Cortez, 2000 U.S. Dist. LEXIS 5705, at *31–32, 2000 WL 536666, at *10 (“By its terms, however, RESPA applies not only to the actual settlement process but also to the ‘servicing’ of any ‘federally related mortgage loan.’”).

[27] Wanger, 127 Cal. Rptr. 2d at 689.

[28] John Jin Lee & John H. Mancuso, Housing Finance: Major Developments in 1989, 45 Bus. Law. 1863, 1870 (1990); see also Wanger, 127 Cal. Rptr. 2d at 689 (quoting article).

[29] Lin & Mancuso, supra note 28, at 1870.

[30] Sutton v. CitiMortgage, Inc., 228 F. Supp. 3d 254, 261 (S.D.N.Y. 2017). As time would show, investors had their own reasons to fret. Cf. Adam J. Levitin, Andrey D. Pavlov & Susan M. Wachter, The Dodd-Frank Act and Housing Finance: Can It Restore Private Risk Capital to the Securitization Market?, 29 Yale J. on Reg. 155, 156–57 (2012) (“Investors have discovered that loss severities on defaulted loans are heavily dependent on servicer behavior regarding loan modifications and foreclosures[,]” but that they “have little ability to monitor servicer conduct or discipline wayward servicers.”).

[31] 12 U.S.C. § 2605(i)(3) (emphasis added); see also, e.g., Christenson v. Citimortgage, Inc., No. 12-cv-02600-CMA-KLM, 2013 U.S. Dist. LEXIS 13344, at *17–19, 2013 WL 5291947, at *6 (D. Colo. Sept. 18, 2013) (explaining why servicing under section 2605(i)(3) cannot be read to “encompass acceleration or foreclosure issues”).

[32] Arielle L. Katzman, Note, A Round Peg for a Square Hole: The Mismatch between Subprime Borrowers and Federal Mortgage Remedies, 31 Cardozo L. Rev. 497, 518 (2009); Christopher L. Peterson, Predatory Structured Finance, 28 Cardozo L. Rev. 2185, 2210–12 (2007).

[33] Ploog v. HomeSide Lending, Inc., 209 F. Supp. 2d 863, 870 (N.D. Ill. 2002).

[34] McLean v. GMAC Mortg. Corp., 398 F. App’x 467, 471 (11th Cir. 2010) (“RESPA is a consumer protection statute”; “[c]onsequently, RESPA is to be ‘construed liberally in order to best serve Congress’ intent.’” (quoting Ellis v. Gen. Motors Acceptance Corp., 160 F.3d 703, 707 (11th Cir. 1998) (addressing the remedial nature of the Truth in Lending Act))); cf. Clemmer v. Key Bank N.A., 539 F.3d 349, 353 (6th Cir. 2008) (stating that several consumer protection statutes must be “accorded ‘a broad, liberal construction in favor of the consumer’” (quoting Begala v. PNC Bank, Ohio, Nat’l Ass’n, 163 F.3d 948, 950 (6th Cir. 1998))).

[35] Johnstone v. Bank of Am., N.A., 173 F. Supp. 2d 809, 816 (N.D. Ill. 2001).

[36] Weisheit v. Rosenberg & Assocs., LLC, JKB-17-0823, 2017 U.S. Dist. LEXIS 188605, at *8–9, 2017 WL 5478355, at *3 (D. Md. Nov. 15, 2017); see also Flagg v. Yonkers S&L Ass’n, 307 F. Supp. 2d 565, 580 (S.D.N.Y. 2004) (similarly construing RESPA).

[37] See, e.g., Rawlings v. Dovenmuehle Mortg., Inc., 64 F. Supp. 2d 1156, 1166 n.7 (M.D. Ala. 1999) (broadly construing section 2605, “clearly a remedial, consumer-protection statute,” and disagreeing with Katz, 992 F. Supp. at 254–56); Dujanovic v. MortgageAmerica, Inc., 185 F.R.D. 660, 669 (N.D. Ala. 1999) (observing that Congress enacted RESPA “to protect borrowers from brokers” and that “Congress clearly stated that RESPA was designed to protect consumers”).

[38] Mary S. Robertson, The “New and Improved” Real Estate Settlement Procedures Act and Regulation X, 47 Consumer Fin. LQ. Rep. 272, 273 (1993).

[39] Flagg, 307 F. Supp. 2d at 578–81. RESPA does so in some of the same sections applicable to servicers. E.g., 12 U.S.C. §§ 2605, 2607, 2609(a).

[40] Bryce v. Lawrence (In re Bryce), 491 B.R. 157, 179 (Bankr. W.D. Wash. 2013); MorEquity, Inc. v. Naeem, 118 F. Supp. 2d 885, 900 (N.D. III. 2000).

[41] Kevelighan v. Trott & Trott, P.C., 771 F. Supp. 2d 763, 770 (E.D. Mich. 2010).

[42] 12 U.S.C. § 2609(a); Flagg, 396 F.3d at 184.

[43] 12 U.S.C. § 2609(b); Dolan v. Fairbanks Capital Corp., 930 F. Supp. 2d 396, 417 (E.D.N.Y. 2013).

[44] 12 U.S.C. § 2609(c); Hardy v. Regions Mortg., Inc., 449 F.3d 1357, 1359–60 (11th Cir. 2006).

[45] Michael S. Glassman, Note, Real Estate Settlement and Procedures Act of 1974 and Amendments of 1975: The Congressional Response to High Settlement Costs, 45 U. Cin. L. Rev. 448, 456 (1976).

[46] This construction has been chiefly based on the absence of the requisite legislative intent. E.g., Hardy, 449 F.3d at 1360; Louisiana v. Litton Mortg. Co., 50 F.3d 1298, 1304 (5th Cir. 1995); Allison v. Liberty Sav., 695 F.2d 1086, 1087 (7th Cir. 1982); McCray v. Bank of Am. Corp., No. ELH-14-2446, 2017 U.S. Dist. LEXIS 54388, at *35, 2017 WL 1315509, at *15 (D. Md. Apr. 10, 2017); Burkett v. Bank of Am., N.A., No. 1:10CV68-HSO-JMR, 2011 U.S. Dist. LEXIS 112719, at *7–8, 2011 WL 4565881, at *3 (S.D. Miss. Sept. 29, 2011); Sarsfield v. Citimortgage, Inc., 667 F. Supp. 2d 461, 467 (M.D. Pa. 2009); Birkholm v. Wash. Mut. Bank, F.A., 447 F. Supp. 2d 1158, 1163 (W.D. Wash. 2006); McAnaney v. Astoria Fin. Corp., 357 F. Supp. 2d 578, 591 (E.D.N.Y. 2005); Campbell v. Machias Sav. Bank, 865 F. Supp. 26, 31 (D. Me. 1994); Bergkamp v. N.Y. Guardian Mortgagee Corp., 667 F. Supp. 719, 723 (D. Mont. 1987). Courts tend to give two reasons for this conclusion about congressional intent. First, RESPA explicitly sets forth statutes of limitations for claims brought pursuant to sections 2605, 2607, and 2608 in section 2614. 12 U.S.C. § 2614. “Had Congress intended to create a private right of action under § 2609, that section also would have been included in the statute of limitations section.” McAnaney, 357 F. Supp. 2d at 591; accord Allison, 695 F.2d at 1089; McWilliams v. Chase Home Fin., LLC, No. 4:09CV609 RWS, 2010 U.S. Dist. LEXIS 43549, at *9–12, 2010 WL 1817783, at *3–4 (E.D. Mo. May 4, 2010). Second, Congress did amend section 2609 after several circuit courts had so decided, but only added an administrative remedy to section 2609(c). McAnaney, 357 F. Supp. 2d at 591. It therefore implicitly endorsed this construction. Litton, 50 F.3d at 1301; see also Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc., 135 S. Ct. 2507, 2520 (2015) (“Congress’ decision in 1988 to amend the . . . [Fair Housing Act (FHA)] while still adhering to the operative language in §§ 804(a) and 805(a) is convincing support for the conclusion that Congress accepted and ratified the unanimous holdings of the Courts of Appeals finding disparate-impact liability.”); cf. Midlantic Nat’l Bank v. New Jersey Dep’t of Envtl. Prot., 474 U.S. 494, 501 (1986) (“The normal rule of statutory construction is that if Congress intends for legislation to change the interpretation of a judicially created concept, it makes that intent specific.”).

[47] See Mott, supra note 20, at 1191–1202 (disputing this construction for this and other reasons). This reading, of course, has not limited section 2609’s usefulness to public plaintiffs.

[48] E.g., Collins, 105 F.3d at 1367; Au v. Republic State Mortg. Co., 948 F. Supp. 2d 1086, 1101 (D. Haw. 2013); Martin v. Citimortgage, Inc., No. 1:09-cv-03410-JOF, 2010 U.S. Dist. LEXIS 43525, at *7 n.3, 2010 WL 1780076, at *3 n.3 (N.D. Ga. May 4, 2010). Per the weight of the relevant jurisprudence, there are only three private causes of action under RESPA: “actions pursuant to Sections 2605, 2607, and 2608.” Arroyo v. PHH Mortg. Corp., No. 13-CV-2335(JS) (AKT), 2014 U.S. Dist. LEXIS 68534, at *37, 2014 WL 2048384, at *13 (E.D.N.Y. May 19, 2014). Section 2607 prohibits kickbacks and unearned fees, and section 2608 bars sellers from “requir[ing] directly or indirectly, as a condition to selling a covered property, that title insurance covering the property be purchased by the buyer from any particular title company.” 12 U.S.C. §§ 2607–08.

[49] Kevelighan, 771 F. Supp. 2d at 770.

[50] 12 U.S.C. § 2605(g); Jacques v. U.S. Bank N.A. (In re Jacques), 416 B.R. 63, 70 (Bankr. E.D.N.Y. 2009); Kevelighan, 771 F. Supp. 2d at 770; see also, e.g., Burkett, 2011 U.S. Dist. LEXIS 112719, at *5, 2011 WL 4565881, at *2 (“Section 2605(g) governs the administration of escrow accounts[.]”); Girgis v. Countrywide Home Loans, Inc., 733 F. Supp. 2d 835, 848 (N.D. Ohio 2010) (same). So worded, section 2605(g) does not govern the timeliness of an initial deposit to an escrow account or when the servicer can collect funds from the borrower for such payments. Staats v. Bank of Am., N.A., No. 3:10-CV-68 (BAILEY), 2011 U.S. Dist. LEXIS 158376, at *17–18, 2011 WL 12451607, at *6 (N.D. W. Va. Aug. 23, 2011); Kevelighan, 771 F. Supp. 2d at 770.

[51] 12 C.F.R. § 1024.17(k)(1); Althaus v. Cenlar Agency, Inc., No. 17-445 (JRT/DTS), 2017 U.S. Dist. LEXIS 167475, at *2, 2017 WL 4536074, at *1 (D. Minn. Oct. 10, 2017).

[52] 12 U.S.C. § 2605(f); Christiana Tr. v. Riddle, 911 F.3d 799, 804 (5th Cir. 2018). Compounding this problem, RESPA neither denotes nor tenders an example of the term “actual damages.” Tauss v. Midland States Bank, No. 5:16-cv-00168-RLV-DSC, 2017 U.S. Dist. LEXIS 139364, at *20, 2017 WL 3741980, at *7 (W.D.N.C. Aug. 30, 2017). Formally and colloquially, this phrase means the “amount awarded to a complainant [either] to compensate for a proven injury or loss” or to “repay actual losses.” Black’s, supra note 2, at 471.

[53] Lane v. Vitek Real Estate Indus. Grp., 713 F. Supp. 2d 1092, 1101 (E.D. Cal. 2010); Allen, 660 F. Supp. 2d at 1097.

[54] 12 U.S.C. § 2614; Girgis, 733 F. Supp. 2d at 847.

[55] 12 U.S.C. § 2605(f)(1)(A) (emphasis added); see Hutchinson v. Delaware Sav. Bank, FSB, 410 F. Supp. 2d 374, 382 (D.N.J. 2006) (construing section 2605(f)(1)(A)); see also Jones v. Select Portfolio Serv., Inc., No. 08-972, 2008 U.S. Dist. LEXIS 33284, at *27, 2008 WL 1820935, at *9–10 (E.D. Pa. Apr. 22, 2008) (finding complaint to have failed to properly plead causation and specific damages to support the RESPA claim); Katz v. Dime Sav. Bank, FSB, 992 F. Supp. 250, 255–57 (W.D.N.Y. 1997) (granting summary judgment for a plaintiff’s failure to show actual pecuniary harm).

[56]  Renfroe v. Nationstar Mortg., LLC, 822 F.3d 1241, 1246 (11th Cir. 2016) (citing, among others, Toone v. Wells Fargo Bank, N.A., 716 F.3d 516, 523 (10th Cir. 2013) and Hintz v. JPMorgan Chase Bank, N.A., 686 F.3d 505, 510-11 (8th Cir. 2012)); accord, e.g., Hagan v. Credit Union of Am., No. 11-1131-JTM, 2012 U.S. Dist. LEXIS 56100, at *12–13, 2012 WL 1405734, at *5 (D. Kan. Apr. 23, 2012).

[57] McLean, 398 F. App’x at 471 (as to section 2605(e)); accord, e.g., Stevens v. Citigroup, Inc., No. 00-3815, 2000 U.S. Dist. LEXIS 18201, at *11, 2000 WL 1848593, at *3–4 (E.D. Pa. Dec. 15, 2000); see also, e.g., Quinlan v. Carrington Mortg. Servs., LLC, 2014 U.S. Dist. LEXIS 95448, at *14–15, 2014 WL 3495838, at *5 (D.S.C. July 14, 2014) (applying principle); Champion v. Bank of Am., N.A., No. 5:13-CV-00272-BR, 2014 U.S. Dist. LEXIS 78, at *7–9, 2014 WL 25582, at *3–4 (E.D.N.C. Jan. 2, 2014) (collecting cases so holding).

[58] See Allen, 660 F. Supp. 2d at 1097 (as to section 2605 generally); see also, e.g., Frazile v. EMC Mortg. Corp., 382 F. App’x 833, 836 (11th Cir. 2010) (affirming dismissal of a claim for “fail[ing] to allege facts relevant to the necessary element of damages caused by assignment [of loan servicing]” under section 2605(f)); Bishop v. Quicken Loans, Inc., No. 2:09-01076, 2010 U.S. Dist. LEXIS 93692, at *19–20, 2010 WL 3522128, at *6 (S.D. W. Va. Sept. 8, 2010) (dismissing RESPA claim due to plaintiff’s failure to allege how servicer’s noncompliance with § 2605(f) caused them harm); Singh v. Wash. Mut. Bank, No. 09-2771, 2009 U.S. Dist. LEXIS 73315, at *16, 2009 WL 2588885, at *5 (N.D. Cal. Aug. 19, 2009) (dismissing RESPA claim because, “[i]n particular, plaintiffs have failed to allege any facts in support of their conclusory allegation that as a result of defendants’ failure to respond, defendants are liable for actual damages, costs, and attorney fees”) (quotation marks and citation omitted); cf. Davis v. Bowens, No. 1:11CV691, 2012 U.S. Dist. LEXIS 101402, at *18, 2012 WL 2999766, at *5 (M.D.N.C. July 23, 2012) (dismissing claim due to complaint’s general allegations of harm from the combined actions of all defendants). When there is no allegation that a defendant engaged in “a pattern or practice of noncompliance with the requirements” of section 2605, its statutory damages provision is inapplicable. 12 U.S.C. § 2605(f)(1)(B) (emphasis added).

[59] Frazile, 382 F. App’x at 836; see also, e.g., Stefanowicz v. SunTrust Mortg., No. 3:16-CV-368, 2018 U.S. Dist. LEXIS 24274, at *18–19, 2018 WL 1385976, at *6–7 (M.D. Pa. Feb. 13, 2018) (collecting cases so holding); Yuhre v. JPMorgan Chase Bank, No. 09-CV-02369 (GEB) (JFM), 2010 U.S. Dist. LEXIS 44948, at *16, 2010 WL 1404609, at *6 (E.D. Cal. Apr. 6, 2010) (holding that any alleged loss “must be related to the RESPA violation itself”). A recent appellate opinion underscores the continuing viability of this approach. See Moore v. Wells Fargo Bank, 908 F.3d 1050, 1059 (7th Cir. 2018) (so ruling as to a claim under section 2605(e)(2)).

[61] McLean, 398 F. App’x at 471; see also, e.g., Giordano v. MGC Mortg., Inc., 160 F. Supp. 3d 778, 781 (D.N.J. 2016) (quoting Straker v. Deutsche Bank Nat’l Tr., No. 3:09-CV-338, 2012 U.S. Dist. LEXIS 187379, at *31, 2012 WL 7829989, at *11 (M.D. Pa. Apr. 26, 2012)); Gorbaty v. Wells Fargo Bank, N.A., No. 10-CV-3291 NGG SMG, 2012 U.S. Dist. LEXIS 55284, at *16, 2012 WL 1372260, at *5 (E.D.N.Y. Apr. 18, 2012); Rubio v. U.S. Bank N.A., No. C 13-05752 LB, 2014 U.S. Dist. LEXIS 45677, at *45–46, 2014 WL 1318631, at *15 (N.D. Cal. Apr. 1, 2014) (citing, for support, Lal v. Am. Home Servicing, Inc., 680 F. Supp. 2d 1218, 1223 (E.D. Cal. 2010) and Allen, 660 F. Supp. 2d at 1097).

[62] Davis v. Bowens, No. 1:11CV691, 2012 U.S. Dist. LEXIS 101402, at *18, 2012 WL 2999766, at *5 (M.D.N.C. July 23, 2012).

[63] See Garcia v. Wachovia Mortg. Corp., 676 F. Supp. 2d 895, 909 (C.D. Cal. 2009) (likewise describing a statement alleging that a RESPA violation “subjects defendant[] to actual damages”).

[64] 550 U.S. 544 (2007).

[65] 556 U.S. 662 (2009).

[66] The federal courts’ relatively generous doctrine of judicial notice and rules for the admission of business records will probably abet any such effort. See Fed. R. Evid. 201 (setting the standard and procedures for judicial notice of adjudicative facts in federal court), 803(6) (codifying the hearsay exception for records of a regularly conducted business activity); Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007) (construing Federal Rule of Evidence 201); Philips v. Pitt Cty. Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (same).

[67] Depending on the precise relationship among the insurer, servicer, and adjustor, the servicer may not have actually been responsible for the relevant oversight, but so long as one (or both) took place, the plain language of section 2605(g) renders it legally liable.

[68] Yulaeva v. Greenpoint Mortg. Funding, Inc., No. 09-1504, 2009 U.S. Dist. LEXIS 79094, at *44, 2009 WL 2880393, at *15 (E.D. Cal. Sept. 9, 2009) (citing, as examples, Hutchinson, 410 F. Supp. 2d at 382, and Cortez, 2000 U.S. Dist. LEXIS 5705, at *38–40, 2000 WL 536666, at *10–13); cf., e.g., Moon v. Countrywide Home Loans, Inc., No. 3:09-cv-00298, 2010 U.S. Dist. LEXIS 11281, at *13, 2010 WL 522753, at *5 (D. Nev. Feb. 9, 2010) (“Even if . . . [the defendant] was the servicer of [p]laintiff’s loan and failed to respond to a qualified written request [as required under section 2605(e)], such failure alone does not substantiate a RESPA claim.”).

[69] RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. 639, 649 (2012).

[70] See Amir Shachmurove, Eligibility for Attorneys’ Fees under the Post-2007 Freedom of Information Act: A Onetime Test’s Restoration and an Overlooked Touchstone’s Adoption, 85 Tenn. L. Rev. 571, 634–36 (2018) (describing this standard); cf. Amir Shachmurove, Sovereign Speech in Troubled Times: Prosecutorial Statements as Extrajudicial Admissions, 86 Tenn. L Rev. 401, 462–67 (2019) (same, but as to Federal Rules of Evidence); Amir Shachmurove, The Consequences of a Relic’s Codification: The Dubious Case for Bad Faith Dismissals of Involuntary Bankruptcy Petitions, 26 Am. Bankr. Inst. L. Rev. 115, 151–57 (2018) (same, but also advocating specific modifications in cases arising under title 11 of the U.S. Code).

[71] Cf. Mahaffey, supra note 8, at 11 (describing section 2605(f)’s “language” as “rather uncomplicated”).

By: Amir Shachmurove


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