Consumers from Ohio, Oregon and New Jersey have filed a proposed class action in which they allege Wells Fargo Bank, N.A. unlawfully declined to respond to their legally protected requests for account information on the basis that their accounts were “in active litigation.” According to the plaintiffs, Wells Fargo claimed any response to the requests concerned issues that were “the same or very closely related to the issues raised in the pending litigation,” an apparent violation of Real Estate Settlement Procedures Act (RESPA) regulations.
A borrower can request information or assert that their account is in error by way of a “qualified written request” submitted to a servicer, the case explains. Under RESPA, a servicer of a federally related mortgage loan must respond in writing acknowledging its receipt of a borrower’s qualified written request within five days, excluding legal public holidays and weekends. In the event a qualified written request concerns a potential account error (a “notice of error”), RESPA mandates that servicers “make any appropriate corrections” to the account at issue “not later than 30 days” after receiving a borrower’s written communication. In the alternative, if no error is found, RESPA requires mortgage servicers to provide a statement as to why it believes the account is correct. Both statements must include the name and number of a representative for the servicer who can assist the borrower.
The lawsuit elaborates that the Consumer Financial Protection Bureau (CFPB) in January 2013 amended RESPA with “Regulation X,” which provided expanded guidance on servicers’ responsibilities with regard to responding to borrowers’ qualified written requests. Regulation X, the suit says, stipulated that a mortgage servicer, in response to a request for information, must provide the borrower with the requested information and contact details, or conduct “a reasonable search for the requested information.” If the requested information cannot be obtained after a reasonable search, the servicer must inform the consumer of such, noting the reason why the information cannot be given.
Despite the existence of seemingly clear rules governing how servicers are required to handle information requests, the plaintiffs claim the letters they received from Wells Fargo stated that their inquiries had been forwarded to attorneys for review. While the case concedes there are certain exceptions to RESPA’s requirements, the lawsuit argues that “there is no ‘active litigation’ exception” to Wells Fargo’s responsibility to respond to the plaintiffs and proposed class members.
“As a result of Wells Fargo’s failure to comply with RESPA and Regulation X, Plaintiffs and Class members were each harmed because they incurred the expenses associated with sending [qualified written requests], [requests for information], and [notice of errors]—such as their time, postage, etc.—but they either did not receive the information to which they were legally entitled or did not receive a reasonable investigation of the purported errors regarding their loans, as required under RESPA and Regulation X,” the lawsuit states.
All told, the plaintiffs allege Wells Fargo’s practice of sending letters informing consumers that their account details are involved in “active litigation” is part of a “sustained pattern and practice of noncompliance” with federal law.