What to do after sending a Qualified Written Request (QWR) Letter or Debt Validation Letter (DVL)

OK I Sent a QWR and DVL. Now what?

Neil Garfield

The first thing you need to know is that there is no obligation to answer the notice if the questions are not related to confirming the balance due, existence, ownership, servicing, and status of the underlying obligation.

I have seen many letters entitled “Qualified Written Request” or “Debt Validation Letter” that read like a discovery request that would be struck down by a judge because it seeks information not covered by the FDCPA and RESPA and is too long. The bottom line is get to the point with your challenge on the basic questions and don’t muddy the waters.

Depending upon what you want to do, the next step would be a complaint filed with the CFPB and State AG. Be aware that the CFPB, under its charter authority has clarified the enforcement of RESPA and FDCPA. It became custom and practice before the clarification by CFPB that Dodd-Frank Act created a de facto federal preemption for enforcement.

This led to bottle-necking at the CFPB which lacks the funding, facilities, and personnel to enforce the enumerated statutes for everyone across the country. The Act said that both States and the Federal government (CFPB) had jurisdiction to enforce and should do so. So the CFPB released a statement that specifically tasked the Attorneys general to enforce violations of the FDCPA and RESPA and the other enumerated statutes in Dodd-Frank.

It remains to be seen how much the situation will change. The enumerated laws in Dodd-Frank also create a private right of action (lawsuit). So any homeowner or consumer aggrieved by the violation can sue for injunctive relief and both statutory and compensatory damages. Last year the Supreme court weighed in on this and came up with an “interpretation” that you can’t get statutory damages unless you have actual damages (compensatory).

So the bottom line is that the next move is yours. You can file a claim with the CFPB, which will have an effect because the companies about which you are complaining must answer, knowing that their answer must be truthful or arguably truthful — because lying to a Federal agency is a crime.

It is often true that the answer to the CFPB complaint is not the same as their response to the QWR or DVL. It also contains statements that are inconsistent with the response or non-response to the QWR and DVL — thus proving your point that they are misleading and misdirecting the consumer, in addition to withholding basic information about the existence, ownership, and status of an unpaid loan account.

If you file the complaint with the CFPB you can also file the same complaint with the state AG who should be reminded about their right to enforce — and perhaps how it might be politically expedient to enforce.

But practically speaking the only way you are likely to achieve any meaningful results is by filing suit.

My tactical preference is to file the administrative complaints before filing suit. It provides a record of events to which you can refer that shows (a) you have exhausted all other remedies and (b) that they continue to stonewall the basic questions about the existence, ownership, and status of the alleged underlying debt or unpaid loan account.

The highest likelihood is that you will not be offered any tangible relief by anyone until after you have filed suit and the litigation moves into the window of discovery.

What’s in a Qualified Written Request (QWR) Letter

•  “Qualified Written Requests” under RESPA put mortgage servicers in a troublesome place. But there’s law on their side to help distinguish legitimate issues from abuse and harassment

• A bank will receive a letter from a mortgage borrower, or from an attorney or other agent purporting to act on behalf of that borrower. The letter will generally demand that the lender provide the inquirer with a wide-ranging amount of information concerning the borrower’s loan and the transaction in general.

• The communication may assert that there is a defect or mistake in the borrower’s account, and then demand that immediate action be taken to correct that mistake.

• Asserting only slight oversights in the borrower’s escrow account calculation.

• The letters are marked as “Qualified Written Request” under Section 6 of RESPA.

• The “QWR” label stirs legal consequences that servicers and lenders cannot ignore.

What the law says:

• QWRs are special and important because they arise under specific consumer protection law contained in Section 6 of the Real Estate Settlement Procedures Act (RESPA). Section 6 was added to RESPA in 1990, and generally imposes standards and requirements regarding the assignment sale or transfer of mortgage loan servicing. (12 U.S.C. Section 2605.) Under Section 6 of RESPA, borrowers are afforded a dispute resolution mechanism that gives rise to specific duties on the part of servicers where certain conditions are met.

• RESPA’s Section 6 and Section 3500.21(e) of RESPA’s implementing regulations (Regulation X), provide that consumer inquiries would constitute QWRs where:

1. They are submitted in writing.
2. They include, or allow the servicer to identify, the name and account of the borrower.
3. They include a statement of the reasons for the borrower’s belief that the account is in error or must provide sufficient detail to the servicer about other information the borrower is seeking. (12 U.S.C. Section 2605(e)(1)(B)(ii))

• Where all such items are included in correspondence to a mortgage loan servicer, the servicer must then provide written acknowledgment to the consumer within 20 business days of receipt of the request. The receipt of a QWR triggers an affirmative duty to investigate the problem identified by the consumer, which must be rectified or explained not later than 60 business days after the receipt of the request.

Unlike other inquiries from consumers, the duties that arise from inquiries that qualify as a QWR have potent legal consequences.

• Under RESPA, borrowers can institute a private lawsuit for a Section 6 violation. They can potentially then recover actual and statutory damages (up to $1,000 per violation), plus attorney’s fees.

• Furthermore, class-action lawsuits are available in instances of pattern and practices of non-compliance, within three years, of the violation against a loan servicing company who refuses to comply with Section 6.

• Lawsuits for violations of Section 6 may be brought in any federal district court in the district in which the property is located or where the violation is alleged to have occurred.

• Finally, either HUD, a state attorney general, or state insurance commissioner may bring an injunctive action to enforce violations of Section 6 within three years.

• Clearly then, any correspondence received by a bank that is marked as “QWR” should not be ignored.

• The important question for compliance professionals is, therefore, how should an institution respond to the QWR, and equally important, how should the institution handle requests that are plainly abusive or harassing?

How do you spot a true QWR?

• As a preliminary matter, a request must specify the particular errors or omissions in the account, along with an explanation from the borrower of why he believes an error exists, in order to qualify as a QWR. A list of unsupported demands for information is not sufficient.

• “A qualified written request must … include a statement of the reasons for the belief of the borrower that the account is in error.” Walker v. Equity 1 Lenders Group, 2009 WL 1364430 *4-5 (S.D.Cal. 2009).

• Please note that if your institution is not a mortgage loan servicer, these provisions do not apply to you.

• By coverage and definition, the RESPA provisions under Section 6 apply to only “servicers” as defined by the statute. If you do not service mortgage loans, the requirements described herein are inapplicable to your institution.

• The QWR provision applies only to mortgages secured by a first lien, thereby excluding subordinate-lien loans and open-end lines of credit.

• RESPA requires a QWR to request information “relating to the servicing of the loan.” (See 12 U.S.C. Section 2605(e)(1)(A)).

• “Servicing” is defined as “receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan, including amounts for escrow accounts described in Section10 [of RESPA], and making the payments of principle and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the loan.”

• A QWR which requests no information related to servicing is not a valid QWR. In particular, requests related to origination do not qualify as QWRs.

• A leading case discussing this issue, MorEquity v. Nameem (118 F. Supp. 2d 885 (N.D. Ill. 2000), reached the important conclusion that borrowers fail to state a claim where the borrower’s request merely seeks information concerning the validity of the underlying loan and mortgage documents, but does not seek any information as to the status of the account balance.

Requests made in a QWR must relate to servicing and escrow matters; those requests that relate to extraneous issues dealing with the items relating to the loan’s settlement or secondary market information, for instance, are simply outside the proper scope of the QWR process.

• As a final, critical, note, if after considering all the elements listed above, a bank discards a request as not qualifying under RESPA’s QWR provisions, most legal experts recommend that the bank’s rationale should be well explained, and that the bank should document the reasons for rejecting the supposed QWR. Such rejections should, where possible, be sent back in writing. Legal counsel should be involved in ensuring that this procedure meets legal standards.

Dealing with the legitimate QWR

• When a servicer receives and properly identifies a valid QWR, the servicer must, by law, both acknowledge receipt of a QWR and respond to the substance of any claims or requests included in the QWR.

• In addition, the law directs servicers not to provide information to a consumer reporting agency during the 60 days following receipt of the QWR concerning overdue payments related to that period or to the QWR. (See RESPA Section 2605(e)(3) )

• In establishing procedures to comply with RESPA’s QWR provisions, banks should keep in mind that, contrary to some claims, the QWR process does not require a lender or servicer to stop foreclosure proceedings or other legal action on the loan.

• To properly respond to the QWR:

1. A servicer must, within 20 business days, provide a written response acknowledging receipt of the QWR. (12 U.S.C. Section 2605(e)(1)(A))
2. Within 60 business days the servicer must investigate the account, make any appropriate corrections, and provide the consumer with a report of their action. (Id. at Section 2605(e)(2)(A))
3. If the servicer corrects the account, the servicer must provide a written explanation of the corrections. (Id.)
4. If the servicer does not correct the account, it must provide an explanation or clarification that includes a statement of reasons why the account is correct and the name and telephone number of an employee of the servicer who can be contacted to further assist the borrower.

You can get a FREE Qualified Written Request (QWR) Letter at https://fraudstoppers.org/free

Stop Foreclosure, Sue for Breach of Contract 

Now is the perfect time to stand up for your legal rights and sue for beach of contract, mortgage fraud, and foreclosure fraud because the legal tide is beginning to turn, and homeowners are starting to win! In 2016 the California Supreme Court ruled in Yvanova v. New Century Mortgage Corporation (Case No. S218973, Cal. Sup. Ct. February 18, 2016) that homeowners have legal standing to challenge an assignment of the mortgage loan contract in an action for wrongful foreclosure on the grounds that the assignment(s) is/are void. Obviously if the court had ruled differently, the banks would have had carte blanche to forge mortgage assignments with wild abandon. In fact, without a system of endorsements and assignments it would be impossible to determine who has a legitimate interest in the property!

In THE PAPER CHASE: SECURITIZATION, FORECLOSURE, AND THE UNCERTAINTY OF MORTGAGE TITLE ADAM J. LEVITIN writes "the mortgage foreclosure crisis raises legal questions as important as its economic impact. Questions that were straightforward and uncontroversial a generation ago today threaten the stability of a $13 trillion mortgage market: Who has standing to foreclose? If a foreclosure was done improperly, what is the effect? And what is the proper legal method for transferring mortgages? These questions implicate the clarity of title for property nationwide and pose a too- big-to-fail problem for the courts.

The legal confusion stems from the existence of competing systems for establishing title to mortgages and transferring those rights. Historically, mortgage title was established and transferred through the “public demonstration” regimes of UCC Article 3 and land recordation systems. This arrangement worked satisfactorily when mortgages were rarely transferred. Mortgage finance, however, shifted to securitization, which involves repeated bulk transfers of mortgages.

Like many other cases, current trial court decisions are getting reversed because the courts are waking up to the reality of the rule of law. What they have been following is an off the books rule of “anything but a free house.” However a recent Yale Law Review Article eviscerates the assumptions of a free house for the homeowners and destroys the myth that somehow that policy has saved the nation. You can read the Yale Law Review article “In Defense of “Free Houses” for more information on this tide change.

To facilitate securitization, deal architects developed alternative “contracting” regimes for mortgage title: UCC Article 9 and MERS, a private mortgage registry. These new regimes reduced the cost of securitization by dispensing with demonstrative formalities, but at the expense of reduced clarity of title, which raised the costs of mortgage enforcement. This trade-off benefited the securitization industry at the expense of securitization investors because it became apparent only subsequently with the rise in mortgage foreclosures. The harm, however, has not been limited to securitization investors. Clouded mortgage title has significant negative externalities on the economy as a whole.

If your loan contains fraud or it was securitized then your lender may have breached your mortgage loan contract, and therefore your mortgage loan contract could be legally challenged in a court of law. If your mortgage loan contract is declared legally void, then any assignments of the mortgage loan contract, or subsequent assignments, could also be declared legally void.

Securitization is the process of taking an asset and transforming them into a security. A typical example of securitization is a mortgage-backed security (MBS), which is a type of asset-backed security that is secured by a collection of mortgages. Keep in mind that it is perfectly legal for banks to create mortgage-backed securities (MBS's); however there are significant legal ramifications that will either harm you, or benefit you, depending on what actions you take in response to the fact that your mortgage or deed of trust is legally void resulting in your property, in reality, being unsecured, just like a unsecured credit card debt. What's in your wallet?

This is why we recommend that you take immediate action and sue for the remedy the law entitles you to, and that you deserve. Treble damages and clear and free title to your home. Not sure if your loan contains mortgage fraud or if it was securitized, no problem, we will do a free mortgage fraud analysis and free Bloomberg securitization search for you.

Many of the programs that had modest success in the early days have fallen into disfavor as banks have enacted strategies to counter their progress. The banks are not going to go down without a serious fight. They have a large arsenal of tools to use, and the legal muscle to keep the industry off balance. This is not a static game. The reason that banks have been successful, for the most part, in protecting the large number of mortgages that were securitized is that there is an intricate web of legal theories that they hide behind to justify what they have done. In effect, they have created a shell game where the ball seems to move around in defiance of the laws of physics.

The banks are relying on a complex interaction between UCC 3 commercial paper law, UCC 9 securitization law, bailment law, agency law and local laws of the jurisdiction where the property is located. They would have us believe that what they have been doing since the 1970’s is perfectly legitimate. Many lawyers who have challenged the banks have gotten close to exposing the scheme only to find that judges retreat away from the complexity of the legal theories involved and fall back on procedural barriers under the auspices of protecting the equitable interests of the banks and their agents.

FRAUD STOPPERS Foreclosure Defense Program has moved the bar forward in many substantial ways:

• Our Private Administrative process is a targeted approach to Informal Discovery:
• 3-501. PRESENTMENT or States equivalent
• Mortgage Error Resolution/Request for Information: If you believe there is an error on your mortgage loan statement or you’d like to request information related to your mortgage loan servicing, you must exercise certain rights under Federal law related to resolving errors and requesting information about your mortgage loan. If you think your credit report, bill or your mortgage loan account contains an error, or if you need more information about your mortgage loan, you send a written letter concerning your error and/or request.
• Cutting edge mortgage fraud examination and court ready lawsuits and trial ready evidence to win your case
• Nationwide foreclosure defense attorneys and Pro Se litigation education and support products and services

Subsection of Presentment (example Covenant 8 of UCC3 Note) shows NOTE and under paragraph 1 states: “BORROWER’S PROMISE TO PAY: In return for a loan that I have received, I promise to pay….

MULTI STATE FIXED RATE NOTE--Single Family--Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3200 1/01 (page 1 of 3 pages) Covenant:

1. WAIVERS

I and any other person who has obligations under this Note waive the rights of Presentment and Notice of Dishonor. “Presentment” means the right to require the Note Holder to demand payment of amounts due. “Notice of Dishonor” means the right to require the Note Holder to give notice to other persons that amounts due have not been paid.

• 15 U.S. Code § 1692g - Validation of debts

Often a debt collector cannot validate a debt and therefore cannot legally enforce collections.

• Truth In Lending Act (TILA RESCISSION) codified in 12 CFR Part 226 (Regulation Z); particularly§ 226.34 Prohibited acts and §226.32 sub-paragraph (ii) et seq. predatory lending practices

A mortgage loan covered by the Truth in Lending Act may be rescinded by mailing a Rescission Letter to the purported lender, forcing the purported lender/creditor to oppose that rescission with a lawsuit within 20 days or lose all opposition rights.

• The primary focus of the legal aspect of our program revolves around taking the theories and best practices that have been most successful around the country and make refinements.

“Here, the specific defect alleged is that the attempted transfers were made after the closing date of the securitized trust holding the pooled mortgages and therefore the transfers were ineffective.

• Our program seeks to avoid getting mired in the complexity of the various areas of law involved, instead focusing on a simple, focused approach that makes it harder for judges to avoid the strength of our core arguments.

• The PMA trustees and executive team have a diverse set of skills and significant experience in the core areas that will improve the success factors for our operations.

We have spent an exhaustive amount of time analyzing all of the cases that have been successful in resolving mortgage securitization problems. We have designed our legal information litigation strategy to hit the banks hard and fast where they are most vulnerable.

Our primary focus is on getting clear and marketable title to the property by arguing that the actions of the banks have made the security provisions of the mortgage/deed of trust unenforceable.

Instead of fighting the foreclosure itself head-on, we argue that none of the banks or their agents has the right to enforce the foreclosure provisions of the Mortgage/Deed of Trust. In effect, if none of the banks have standing to enforce the foreclosure provision, we are entitled AS A MATTER OF LAW to a declaratory judgment of Breach of Contract (Security Agreement) that is res judicata, i.e., a permanent ban on foreclosure.

The Stand & Fight Program is a complete program that provides you with everything you need:

• Administrated Process
• Court Ready Chain of Title Investigation and Signed Affidavit
• Complaint along with all exhibits
• Legal Research
• Legal Briefs
• Motions
• Answers
• Interrogatories
• Depositions
• Case Management for Local Civil Rules of Procedures
• Training and Support