Seventh Circuit Holds That Borrower Failed To Show Harm Caused By Servicer's QWR Response

Author:Mr Mark J. Windham and Alan D. Wingfield
Profession:Troutman Sanders LLP

The U.S. Court of Appeals for the Seventh Circuit recently held that a borrower failed to establish an actual harm resulting from his mortgage servicer's response to a Qualified Written Request ("QWR"), thus affirming the lower court's grant of summary judgment in favor of the servicer. The use of QWRs is a common and growing tactic employed by borrowers as an attempt to thwart mortgage servicers who are lawfully exercising their rights in default situations. Thus, this decision comes as welcome news that the courts may impose limits on use of technical QWR-related claims to frustrate collection efforts. The case is Moore v. Wells Fargo Bank, N.A., No. 18-1564, 2018 U.S. App. LEXIS 31534, 2018 WL 5816723 (7th Cir. Nov. 7, 2018).

In November 2012, a Wisconsin state court entered a foreclosure judgment against Terrence Moore due to his longstanding payment default on a mortgage serviced by Wells Fargo. Following multiple delays arising out of loss mitigation efforts and Moore's bankruptcy filing, a sheriff's sale was finally scheduled for October 2016. In August of that year, Moore sent a letter to Wells Fargo containing "twenty-two wide-ranging questions about his account." Wells Fargo treated the letter as a QWR under the Real Estate Settlement Procedures Act ("RESPA"), acknowledged receipt, and indicated that a substantive response would be provided by the statutory prescribed deadline of September 30.

Two days prior to the response deadline - on September 28 - Moore filed suit in the district court, alleging that by failing to respond to the QWR, Wells Fargo had violated RESPA and Wisconsin law. Moore claimed that he was harmed by this alleged failure because he was going to use the responses to plan his "next steps" in relation to the upcoming sheriff's sale, but instead received "no answers." Moore further claimed that Wells Fargo's lack of response caused him to suffer emotional distress because he feared losing his home "unfairly, without knowing whether the lender had a right to foreclose." Wells Fargo provided its substantive response as promised on September 30.

The district court granted Wells Fargo's summary judgment motion, finding that Moore failed to provide evidence that Wells Fargo violated RESPA or state law, and failed to show how any alleged failure, even had it occurred, caused him...

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