Relevant Federal Laws for Loan Modification

Federal law now requires lenders to comply with certain timelines regarding loan modification inquiries. Section 6 of The Real Estate Settlement Procedures Act "RESPA" requires lenders to acknowledge receipt of a Qualified Written Request "QWR" within twenty (20) days. Additionally, lenders are now required to respond to a QWR within sixty (60) days. A properly executed QWR may also protect the borrower from having information about past due payments reported to certain credit reporting agencies by the lender.

However, not all inquiries constitute a QWR for RESPA purposes. A lender's failure to comply with the requirements of RESPA may give rise to damages, costs and attorney's fees payable to the borrower by the lender. The law firm of Marc J. Victor, P.C. is experienced with RESPA requests and will aggressively invoke the rights and protections of RESPA on behalf of all loan modification clients. The following contains more specific information about RESPA.

(1) Notice of receipt of inquiry

(A) In general

If any servicer of a federally related mortgage loan receives a qualified written request from the borrower (or an agent of the borrower) for information relating to the servicing of such loan, the servicer shall provide a written response acknowledging receipt of the correspondence within 20 days (excluding legal public holidays, Saturdays, and Sundays) unless the action requested is taken within such period.

(B) Qualified written request

For purposes of this subsection, a qualified written request shall be 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.

(2) Action with respect to inquiry

Not later than 60 days (excluding legal public holidays, Saturdays, and Sundays) after the receipt from any borrower of any qualified written request under paragraph (1) and, if applicable, before taking any action with respect to the inquiry of the borrower, the servicer shall-
(A) make appropriate corrections in the account of the borrower, including the crediting of any late charges or penalties, and transmit to the borrower a written notification of such correction (which shall include the name and telephone number of a representative of the servicer who can provide assistance to the borrower);
(B) after conducting an investigation, provide the borrower with a written explanation or clarification that includes- (i) to the extent applicable, a statement of the reasons for which the servicer believes the account of the borrower is correct as determined by the servicer; and
(ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower; or
(C) after conducting an investigation, provide the borrower with a written explanation or clarification that includes- (i) information requested by the borrower or an explanation of why the information requested is unavailable or cannot be obtained by the servicer; and
(ii) the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower.

(3) Protection of credit rating

During the 60-day period beginning on the date of the servicer's receipt from any borrower of a qualified written request relating to a dispute regarding the borrower's payments, a servicer may not provide information regarding any overdue payment, owed by such borrower and relating to such period or qualified written request, to any consumer reporting agency (as such term is defined under section 1681a of title 15).

(f) Damages and costs

Whoever fails to comply with any provision of this section shall be liable to the borrower for each such failure in the following amounts.

(1) Individuals

In the case of any action by an individual, an amount equal to the sum of-
(A) any actual damages to the borrower as a result of the failure; and
(B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $1,000.

(2) Class actions

In the case of a class action, an amount equal to the sum of-
(A) any actual damages to each of the borrowers in the class as a result of the failure; and
(B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not greater than $1,000 for each member of the class, except that the total amount of damages under this subparagraph in any class action may not exceed the lesser of-
(i) $500,000; or
(ii) 1 percent of the net worth of the servicer.

(3) Costs

In addition to the amounts under paragraph (1) or (2), in the case of any successful action under this section, the costs of the action, together with any attorneys fees incurred in connection with such action as the court may determine to be reasonable under the circumstances.

(4) Nonliability

A transferor or transferee servicer shall not be liable under this subsection for any failure to comply with any requirement under this section if, within 60 days after discovering an error (whether pursuant to a final written examination report or the servicer's own procedures) and before the commencement of an action under this subsection and the receipt of written notice of the error from the borrower, the servicer notifies the person concerned of the error and makes whatever adjustments are necessary in the appropriate account to ensure that the person will not be required to pay an amount in excess of any amount that the person otherwise would have paid.

(g) Administration of escrow accounts

If the terms of any federally related mortgage loan require the borrower to make payments to the servicer of the loan for deposit into an escrow account for the purpose of assuring payment of taxes, insurance premiums, and other charges with respect to the property, the servicer shall make payments from the escrow account for such taxes, insurance premiums, and other charges in a timely manner as such payments become due.

(h) Preemption of conflicting State laws

Notwithstanding any provision of any law or regulation of any State, a person who makes a federally related mortgage loan or a servicer shall be considered to have complied with the provisions of any such State law or regulation requiring notice to a borrower at the time of application for a loan or transfer of the servicing of a loan if such person or servicer complies with the requirements under this section regarding timing, content, and procedures for notification of the borrower.

The Mortgage Forgiveness Debt Relief Act of 2007

In cases where a lender decides to forgive all or a portion of a borrower's debt, the forgiven amount is normally considered income for the borrower and is subject to taxation. However, The Mortgage Forgiveness Debt Relief Act of 2007 may operate to eliminate or mitigate such tax liability. This tax benefit is limited to primary residences. Consultation with a qualified tax advisor is necessary to determine whether a borrower qualifies for this tax benefit.

Disclaimer

The information contained herein is provided for general information purposes only and is not intended to convey a legal opinion or legal advice for any particular case or specific situation. Nothing in this website shall create an attorney-client relationship. Representation does not commence until a fee agreement is signed and the fee is received. The law firm of Marc J. Victor, P.C. cannot guarantee any particular result regarding your loan modification. As such, nothing contained in this website should be construed to be a guarantee or prediction of result.

Marc J. Victor, P.C.
3145 South Price Road, Suite 110
Chandler, Arizona 85248

Main : 866-330-3466
Fax : 480-857-0150

Email: mike@AttorneyForLoanMods.com