What is a notice of error under RESPA related to my mortgage?
“What is a notice of error under RESPA related to my mortgage?”
What is a Notice of Error?
That’s when your mortgage company has committed an error in what is known as the “servicing” of your loan. That could be what they claim you owe, about home owners insurance being canceled, about credit reporting, about lost mitigation, loan modifications, etc…
Basically anything that you’re dealing with your mortgage company on. If they have made an error, you can give them this Notice of Error and that gives them a chance to fix their mistake, to fix the problem.
What are some rules about a Notice of Error?
Our suggestion is you do one error per letter. If your mortgage company has committed ten errors, we’ll send them ten different letters so that each letter is self-contained and they can just look at that and say, “Okay, this is the mistake. This is the error we made. Now, are we willing to fix this error?”
Then they go to the second letter, then the third letter, etc.
You could have a mortgage company that has denied receiving a payment but you have the proof that they received it and they cashed the check, actually. Then the next month they say, “Since you were late, we’re hitting you with a late fee.”
That would be a second error.
Then they report it on your credit report, you could dispute that through this vehicle of a Notice of Error.
Then maybe they say, “Now we’re going to start foreclosure proceedings.”
All these different errors. They may be all separate or they may be interrelated. The first domino falls and that hits the next one, next one, next one. Either way, I would separate out the errors so one error per letter and you need to send it to the correct address. You’ll find that on the mortgage statement or the website …
On the monthly mailing statement, usually they’ll say, “A qualified written request”, which is the old fashioned version of a Notice of Error or Request for Information and the monthly mortgage statement may also directly say Notice of Error or Request for Information.
It will give you that address or you go to their website, or you call them and ask them what their address is.
If they don’t have a special address for this then you can send this to the normal address, but most mortgage companies have a specific address.
You have to send it certified so you can prove delivery. You can do it overnight, you can do it all different ways, but the bottom line is you have to be able to prove that your letter, not only was mailed, but that it was received.
It could be mailed and just not make it to the mortgage company. You have to be able to prove it. You have to understand that a lot of these mortgage companies have the mindset of, “If we get it and it’s not certified, and the consumer, the homeowner, cannot prove we got it, just throw it in the garbage.”
Then they say to you, “Prove we got it.”
Well, you can’t. You need to do it certified, overnight, however you want to do it so you can prove delivery. What we recommend is doing it certified mail. Costs you about $7 per letter and that way they have to sign the green card and you know that they received that letter.
What happens when they get that letter?
They have to acknowledge receipt, in writing, within 5 business days. In other words, they get the letter, 5 business days goes by, they have to mail you an acknowledgement of the receipt of that letter. Now, they can send you one letter that says, “Hey, we got 10 Notices of Error. We’re acknowledging receipt.”
That’s fine. Then they have 30 business days from receipt of the letter to correct the error or to say, “Hey look, we examined this. We took a look at it, there’s nothing we did wrong. We’re not changing a thing.” They have to do one of those. Either fix it or tell you they’re not going to fix it.
What happens if they violate this law?
Maybe they don’t investigate or they do such a lousy investigation when it’s obvious that they should have fixed the error. Then you can get actual damages. We also call these compensatory damages because they are to compensate you. It could be that because of this error you’ve been hit with a bunch of late fees, or maybe they’ve started foreclosure, maybe they’ve taken your house illegally.
You could have a massive amount of economic damages. You can also get mental anguish. Obviously the stress of somebody taking your house or threatening to take your house is incredible.
You can also get statutory damages and this can be up to $2000 per violation. Take our example of 10 errors.
You send them those 10 letters they refuse to acknowledge them.
They refuse to fix the problem.
Well, that may be 10-20 violations.
That could be $20-40,000 just in statutory damages. Then we can talk about what are the actual damages. Very, very powerful law here.
They could also be required, the mortgage company can, to pay your attorney’s fees. They must pay their lawyer when you sue the mortgage company, and if you’re successful they may be required to pay your lawyer. Here’s the significance of this; when these mortgage companies get caught and they say, “We broke the law. We did all this terrible stuff, but the homeowner caught us. They sent these RESPA letters, these Notice of Errors, we’ve been sued, what’s our exposure?”
Then their lawyers say,”Here’s the statutory damages at up to $2,000 per violation … We have a lot of exposure, actual damage … By the way, we have to pay the consumers’ lawyer.” They’re like, “Oh my goodness, let’s get this thing settled.”
Not always, but a lot of times, at least the smart companies, when they realize “Okay, we did some bad stuff and we got caught. Let’s get this settled in a fair way so that we don’t have to pay our lawyers a bunch of fees and the consumers’ lawyers a bunch of fees.” Very powerful motivator for them.
Remember there are other laws that can apply.
Usually if we’re doing Notice of Error we’re also doing a Request for Information, which is saying, “Give us some information.” You may have the FDCPA, Fair Debt Collection Practices Act that can apply to your mortgage company. That’s a very powerful law. There’s false credit reporting and maybe the FCRA, Fair Credit Reporting Act. There’s any number of laws that may apply.
We don’t want to just be fixated just on RESPA. However, RESPA is a very powerful law and has recently changed to make it a lot more powerful than it used to be.
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