In Part One, we reviewed the essential provisions of the new mortgage servicing rules for resolving errors. In Part Two, we will look at the requirements for requesting information about a loan from the servicer. The new rules became effective January 10, 2014.
Even if the borrower is not asserting an error, a borrower is entitled to request, at no charge, information from a servicer relating to the servicing of a mortgage loan. During the foreclosure crisis, some borrowers shared lengthy and complex information requests over the internet. The official interpretation of the rules makes clear that information requests are not an alternative to formal discovery in litigation, but they remain a useful tool for borrowers with questions about a loan.
Requesting Information from a Servicer
if the borrower is not asserting an error, a borrower is entitled to request information at no charge from a servicer relating to servicing of the loan.
There are two essential requirements for information requests. First, the request must contain the borrower’s name and loan number and be sent to the servicer’s designated address, if any, for qualified written requests. Second, the information requested must relate to servicing of the loan.
In recent years, courts have broadly interpreted the scope of information requests to include “any reasonably stated written request for account information.” Catalan v. GMAC Mortgage Corp., 629 F.3d 676 (7th Cir. 2011). A request that challenges the terms of the loan or mortgage documents is not a request relating to servicing. Medrano v. Flagstar Bank, FSB, 704 F.3d 661, 666 (9th Cir. 2012), cert. denied, 133 S. Ct. 2800 (2013). Requests for a payoff balance also are not information requests, presumably because such requests are governed by 12 C.F.R. § 1026.36, part of the TILA rules.
Responding to an Information Request
If a servicer receives a proper information request, the servicer must make a reasonable search and either provide the requested information or notify the borrower that the information is unavailable. For requests other than the identity or contact information for the owner of the loan (discussed below), the servicer must provide the information or the determination within 30 business days. The servicer may extend the deadline by 15 business days by notifying the borrower of the reasons for the extension.
Information is not available to the servicer if it is not in the servicer’s possession or control or the information cannot be retrieved in the ordinary course of business through reasonable efforts. If the information is not available, the servicer must explain the basis for its determination in the written response.
The CFPB offers three illustrations of what information is “available” to a servicer:
- The borrower requests a recording of a telephone call with the servicer. The servicer’s employees have access in the ordinary course of business to audio recordings or call transcripts and, with reasonable effort, can identify the call. The information is available and the servicer must provide it.
- The requested information is stored on electronic back-up media, which is not accessible to employees in the ordinary course of business, and restoring and identifying the record from back-up would require extraordinary effort. The information is not available and the servicer is not required to provide it.
- The borrower requests a document stored at an off-site storage facility that employees can access in the ordinary course of business with reasonable effort. The information is available and the servicer must provide it.
Requesting Information About the Owner of the Loan
If the borrower requests information about the identity or contact information for the owner of the loan, the servicer must respond within 10 business days, without exception. The servicer must identify as owner or assignee the person “on whose behalf the servicer receives payments from the borrower.”
If the servicer owns the loan, the servicer complies if the servicer provides the name, address, and contact information of the servicer. If the loan is owned by an affiliate, the servicer complies by providing the name, address, and contact information for the servicer’s affiliate.
If the loan is owned by a securitized trust, the servicer complies if the servicer provides the name of the trust and the name, address, and contact information for the trustee. However, the servicer does not have to identify each investor in or guarantor of a mortgage-backed securities trust. The CFPB offers the following example:
Assume, for example, a mortgage loan is owned by Mortgage Loan Trust, Series ABC-1, for which XYZ Trust Company is the trustee. The servicer complies with § 1024.36(d) by responding to a borrower’s request for information regarding the owner or assignee of the mortgage loan by identifying the owner as Mortgage Loan Trust, Series ABC-1, and providing the name, address, and appropriate contact information for XYZ Trust Company as the trustee.
Fannie Mae, for example, has issued a guidance to servicers about how to respond to requests to identify the owner when the loan is owned or guaranteed by Fannie. If the loan is held in Fannie Mae’s portfolio, the servicer should name Fannie Mae as the owner. If the loan was securitized into an MBS pool, the servicer should name “Fannie Mae in its capacity as Trustee” as owner and should provide the six-digit pool number.
Circumstances Excusing Compliance With an Information Request
Servicers are not obligated to comply with certain requests, other than to send a notice within 5 business days of the reason for the servicer’s determination. A servicer does not have to comply with any of the following:
- A duplicative request, if the servicer complied with the prior, substantially identical request.
- A request for confidential, proprietary, or privileged information (e.g., information regarding management, compensation or discipline of employees, compliance audits, investigation reports).
- A request for information not directly related to the borrower’s account.
- A request that is overly broad (would require production of an unreasonable volume of documents) or unduly burdensome (would be unreasonably expensive or a reasonably diligent servicer could not comply within 45 business days).
- A request sent more than one year after the loan is paid off or servicing was transferred to another.
Nothing in the rules prohibits a borrower from submitting a single qualified written request that includes both an error notice and an information request. The servicer must comply with the applicable requirements for each request. Furthermore, if a borrower mistakenly identifies a request as a notice of error when it is an information request, or vice versa, the servicer must act based on the substance of the request and not on the borrower’s mistaken designation.
Borrowers or their representatives disputing an error or requesting information should pay careful attention to the form and content of a qualified written request to ensure that the rules will be triggered. Examples of a basic error notice and information request are available on the CFPB website.
If you missed Part One: Error Resolutions, read the full post here.