RESPA stands for Real Estate Settlement Procedures Act that was passed in 1974. Pursuant to RESPA, consumers who have entered into real estate contracts should be provided with accurate information about how much it will cost to close the home’s loan. The information is intended to prevent abusive settlement charges. RESPA demands to provide disclosures to consumers during various times of the transaction. It is an HUD (Housing and Urban Development) consumer protection statute that is designed to help homebuyers in the home buying process.
If a borrower feels that the mortgage provider has violated RESPA by charging unfair or excessive loan settlement charges, the borrower is entitled to file a qualified written request to the mortgage loan servicer demanding an explanation of the charges. The written demand should also contain the reasons upon which the borrower believes that the mortgage account is in error and provide sufficient detail to the servicer regarding other information sought.
The Act requires the mortgage servicer to acknowledge the request letter within 20 days and respond within 60 days. If the mortgage servicer is found to have violated RESPA, they shall be subject to civil penalties including financial damages. During the 60 day responding period, a lender is barred from providing information regarding any overdue payment, owed by the borrower to any consumer reporting agency.
Sample RESPA Request Letter:
VIA CERTIFIED MAIL
Attn: Mortgage Loan Accounting Department
Re: Loan # XXXXXXXX
Name of the Borrower
Dear Sir or Madam:
This is a “qualified written request” pursuant to the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605(e). [Company Name] is the servicer of our mortgage loan at the above address. I/We dispute the amount owed according to the Monthly Billing Statement and request you to send us an itemization of the following:
1. Complete payment history, including the dates and amounts of all the payments I/we have made on the loan till date;
2. Breakdown of the amount of claimed as arrears or delinquencies, including an itemization of all fees charged;
3. Explanation as to how the amount due on the Monthly Billing Statement ($——-) was calculated with an explanation to why this amount was increased to $—— on –MM—DD–YY;
4. The payment dates, purpose of payment and recipient of any and all foreclosure fees and costs charged to my/our account;
5. The payment dates, purpose of payment and recipient of all escrow items charged to my/our account since [–MM—DD–YY] when [Company Name] took over the servicing];
6. Breakdown of the current escrow charge showing how it is calculated and the reasons for any increase within the last 24 months; and
7. Copy of any annual escrow statements and notices of a shortage, deficiency or surplus, sent to me/us within the last three (3) years.
8. Thank you for taking the time to acknowledge and answer this request as required by the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605(e).
Name of the Borrower