Case Law Update: Kilpatrick v. OCWEN Loan Servicing, LLC
In a federal case from the U.S. District Court, Southern District of Florida, a federal judge denied a loan servicing company’s motion to dismiss a plaintiff’s claim that the company failed to comply with regulations established in the Real Estate Settlement Procedures Act (RESPA).
According to the lawsuit, the plaintiff alleged that the loan servicing company failed to acknowledge receiving the plaintiff’s request for information within 5 days per RESPA rules that help ensure consumer protection. As a result, the plaintiff claimed to have suffered actual damages, including costs of mailing their request for information (RFI) and notice of error (NOE), as well as attorneys’ fees and costs. In response, the loan servicing company filed a motion to dismiss the plaintiff’s complaint.
The motion to dismiss concerned the legal standard of Rule 8 of the Federal Rules of Civil Procedure, which requires that complaints contain statements that show a plaintiff is entitled to relief. The loan servicing company moved for dismissal arguing that the plaintiff did not state a claim for which relief can be granted. Specifically, the motion to dismiss states the plaintiff failed to allege they suffered actual damages, and that the plaintiff further failed to allege that their request for information was sent to the appropriate address for customer inquiries.
In the opinion, the court considered the loan servicing company’s argument that the cost of postage, under $100, did not constitute “actual damages” as defined in RESPA section 2605. In previous similar cases, courts have held that costs of postage and preparing requests for information do not constitute a basis for actual damages due to the fact that at the time they are prepared and sent, no RESPA violations had yet been made.
As such, the court ruled that costs of postage for the initial request for information are not recoverable, but that the costs associated with the notice of error would be since they resulted from the loan servicing company’s failure to respond to the request for information and they would not had been incurred if the defendant had properly responded. Additionally, the court found that attorney’s fees could also constitute actual damages and that there was no authoritative basis that a plaintiff must allege the request for information was sent to the designated address for customer inquiries in order to pursue a RESPA claim.