Litigation exposure under the 2013 Dodd-Frank mortgage servicing regulations

A look at the potential for litigation under the Truth in Lending Act and Real Estate Settlement Procedures Act

On January 10, several regulations that will fundamentally change the mortgage servicing and origination industries will go into effect. Essentially extensions of Dodd-Frank created by the Consumer Financial Protection Bureau (CFPB), the changes will present serious compliance issues and litigation exposure.

This three-column series focuses primarily on the potential for litigation under the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA), specifically those provisions that govern responses to borrower inquiries and requests for loss mitigation. Additionally, special attention will be paid to how these regulations and others interface with the foreclosure process.

Challenges specific to notices of error and requests for information

Amended Regulation X provides for error-resolution procedures when a borrower submits a written Notice of Error or Information Request. Under the new procedures, upon receiving a one of these requests, a servicer must provide written notice to a borrower within five days, acknowledging receipt, and then has 30 days to investigate, correct or respond. These short deadlines potentially create serious litigation challenges.

Contributing Author

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David A. Elliott

David A. Elliott is an attorney in Burr & Forman LLP’s Financial Services Litigation Practice Group, which serves as national and regional litigation counsel for...

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Contributing Author

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Nicholas S. Agnello

Nicholas S. Agnello is an attorney in Burr & Forman LLP’s Financial Services Litigation Practice Group, which serves as national and regional litigation counsel for...

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Contributing Author

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Seth I. Muse

Seth I. Muse is an attorney in Burr & Forman LLP’s Financial Services Litigation Practice Group, which serves as national and regional litigation counsel for...

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