How do you fix a problem you’re having with your mortgage company? Most of the time, you can do it without hiring a lawyer or going to court.
But if you try to get it done with a quick phone call, you’ll probably just get that familiar message: “We’re experiencing unusually high call volume. Please hold for the next available operator.” And you hold and hold and the Indian kid that finally answers the phone is an overworked, underpaid peon who has no authority to do anything more than repeat what his computer tells him about your account.
So you write a letter. But not just any letter. A special kind of letter, one that your mortgage servicer is required by law to acknowledge within 5 days. You write a Qualified Written Request.
If you search the internet for an example of a Qualified Written Request (QWR), you are likely to find a lot of documents that claim to be QWRs, but really are not. Why? Because most of the “QWRs” out there are just blanket requests for information, demanding all sorts of loan documents and other things. Mortgage servicers have no obligation to respond to a request that doesn’t “state the reasons for the belief of the borrower that the account is in error.” Walker v. Equity 1 Lenders Group (S.D. Cal. 2009).
Here is what makes a QWR a QWR:
1. You specify particular errors or omissions that you believe to exist with the account. For instance, you may believe that you were wrongfully assessed $15 “property preservation fees” for 3 months. You need to state that fact in your letter.
2. QWR response requirements only apply to servicers, not the originator or the holder of the mortgage. This is usually the people who send you a statement every month. If you receive regular statements, look on the back of the statement for a Qualified Written Requests address. This may be different from the regular correspondence address and the payment address. If you don’t send it to that address, you may not be able to hold them liable for failing to respond.
3. Demand specific information. DO NOT send a gigantic list of requests for documents. The new CFPB regulations 1024.35 specifically exempt servicers from liability in response to an overbroad request. You can request documents, but they must relate to your dispute. For instance, if you are disputing the servicer’s right to charge you force-placed flood insurance, then you can rightfully request:
- Proof that the policy was paid for;
- The identity of the insurer;
- The provision in the mortgage and note that allows them to charge you such fees;
- Declarations pages and other documents relating to the insurance policy;
- Flood zone certification.
If your only problem is that they’re charging you bogus flood insurance, that does not give you the right to demand a copy of the appraisal used when you bought the house back in 2007.
4. Demand specific corrective action. This should be obvious, but it is something that a lot of people fail to do because they’re more concerned with getting documents and hoping to find a technical violation they use against their lender. The purpose of the QWR and the Notice of Error is to help you and the bank correct mistakes without having to go to court. If you don’t tell them what you want fixed, you can’t hold them liable for failing to fix it! So if they’ve assessed you $45 of bogus “property inspections,” you need to demand that they credit you for that $45, plus any interest or other fees that arose from your not having paid that amount. You also can request that they fix any mention of such account on your credit report.
HERE is a sample QWR that demands information relating to insurance and property inspection fees. Sample QWR
NOTE: There are two exceptions to the rules that a QWR relate to a specific dispute. Even if there is no evidence of a mortgage company doing anything wrong, you always have the right to know a) who owns your mortgage and b) what is the payoff amount. The Dodd-Frank Amendments to TILA allow you to request the identity of the holder of your mortgage note at any time and without being charged a fee. 15 U.S.C. 1641(f).
In Alabama, your QWR should mention that you demand a payoff statement pursuant to Ala. Code Sec. 35-10-91. Alabama law provides a specific right to know the payoff amount for your loan.
The QWR can be a very useful tool for fixing account errors and learning why you have been charged amounts you may not legitimately owe, but it must be used judiciously and done properly. If a bank refuses to acknowledge your QWR within 5 days or correct/explain the mistake with 30, then they are liable to you for any damages you sustain as a result. You can do this.
Thank you for rhi info. Very helpful. What about protection under UCC? Can we challenge creditora unser UCC and win?
Attorney Judson E Crump says
The Uniform Commercial COde governs the transfer of negotiable instruments like checks and promissory notes. Mortgage Notes are ‘negotiable instruments’ under the UCC, so UCC law does dictate whether a note has been properly transferred. If you are facing foreclosure by a mortgage company who doesn’t properly hold the note, then UCC may provide you some defenses. However, the UCC usually doesn’t have anything to do with servicing issues, which are 90% of the problems people have with mortgages nowadays. A Notice of Error sent to your mortgage servicer is the best way to start dealing with any servicing issue.
Attorney Judson E Crump says
Sometimes the UCC can provide a defense, if the Note (which is governed by Article 3 of the UCC) is obviously not being held by the foreclosing entity. But while the “show me the note” argument has stopped foreclosures in some cases around the country, most courts are pretty forgiving to mortgage servicers and holders who don’t do everything technically correctly, but appear to have possession of the note. I never bring a lawsuit with nothing but a “show me the note” defense, but if a case does have other mortgage lender misconduct – like failure to respond to a QWR or false statements by a servicer covered by FDCPA – then I will plead standing to sue as a defense, and thereby force the bank to come up with proof of possession of the Note.
So long story short: it is possible to find defense under UCC, but don’t count on it in every court unless the chain of title is just clearly not complete.
Jennifer Perkins says
Hello Mr. Crump,
Chase foreclosed on my home June 2, 2015. I had applied for homeowner’s assistance, but they rejected the application because it was incomplete. I have proof of delivery from FedEx (for the missing documents) but that didn’t matter to them. Unfortunately, I lost my right to redemption because I was unable to leave in the ten-day period due to a broken rib. I tried asking for an extension or if I could even rent the house, but no one at Chase will even discuss this anymore.
Chase purchased our house at auction for $58,000. My husband and I may be able to borrow $60,000 (from a relative) to make an offer to Chase. I believe I can come up with an additional $20,000, which would put us at the amount that I owe Chase as well as the appraised tax value that the property is listed for. We have contacted the attorney for Chase, but they seemed almost confused by our offer. They also stated that we would have to move out and wait until the home is listed. Is there some other way I can go about this? Any ideas would be greatly appreciated.