Breath Inside The House – The Qualified Written Request

This is kind of a broad question so I apologize.  Here is my problem: 

I have owned my own (small) publishing company for 25 years.  The paper I print is sustained solely by the advertising I sell.  Last year business dropped off dramatically.  I refinanced to keep all my payments current thinking it was a temporary situation (it has happened before) but things never bounced back. 

From September to December of 08 I didn’t sell a thing and had to call it quits.  Now I have, and haven’t since September had any income. 

My husband has a decent job but lives in another state (he is a pilot without enough seniority to be based in California) therefore he has an apartment in Phoenix.  My salary has always paid for everything here. he pays for the insurance (car, health, life) he has a little left over to throw my way once in awhile if i ask. 

I have gone back to school to get a degree in computer graphics and should be done by the end of summer or next fall.  I would like my mortgage company to somehow give me a pass for a year (loan reduction) then I will go back to fulfilling my obligation as agreed. 

They won’t budge or help at all, we are now 2 months past due.  Over the last year we have been cutting back in an effort to survive, we have no heat, many days you can see your breath inside the house, our trash can got repossessed (yeah can you believe they do that!) anyway my point is we are not living high on the hog by anyone’s standards. 

I have a first and a second totaling $400,000 all on traditional loans, no weird ARMs and my house is now valued at $180,000.  Can I do a value reduction?  I keep hearing about this.

Susan

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Hi Susan,

First, presently (and everyone please always check the date stamp of these articles) a Chapter 13 bankruptcy can strip off the second mortgage lien, so that you would be left with only a first mortgage on the property.  Second, we will very likely soon see a Cramdown provision for first mortgages. In essence, bankruptcy judges will soon be able to modify loan terms on first mortgages (including writing down principal) and this is without a doubt because of stories similar to the one you’ve shared.  Stay tuned for that, and now onto a related subject.

Interestingly, you refinanced your primary residence last year and that means there was (or should have been) a three-day right of rescission.  That rescission period may be extended from three-days to three-years.  In other words, it may be possible for you to rescind your mortgage loan and if so, then it can be treated as unsecured debt and paid off at a rate of perhaps ten cents on the dollar and you then keep your home free of the lien.  Read: What Triggers TILA Extended Rescission?

If I were in the situation you described, I’d send a few certified mail return receipt requested (CMRRR) letters to my loan servicer labeling each a Qualified Written Request under the RESPA.  The reason for labeling the letters a Qualified Written Request (forgive me for typing Qualified Written Request a lot because this seems like an appropriate article to be ranked high in Google for Qualified Written Request) is because each letter – or rather each failure of the servicer to properly respond – creates a cause of action for you against the servicer.  That could be $1,000 statutory plus actual damages plus attorney fees for each separate request.  This may be advantageous whether the servicer responds (which is what you would prefer) or if they don’t respond (because failure to respond is actionable).  If you live in a judicial foreclosure state then these failed responses become counterclaims as part of the answer filed by your attorney and if your foreclosure is non-judicial then Section 6 of RESPA permits a borrower to file an affirmative action within one year for a mishandled Qualified Written Request.  Ok, so hope I haven’t lost you yet.  Here’s more…

In the first letter, I’d request the identity of the owner of the loan.  Your servicer may or may not own the loan and many times IMO (incidentally, someone asked me what IMO means and it’s an acronym for In My Opinion), the servicer pretends to own the loan.  A section of the TILA specifically 15 U.S.C. § 1641(f)(2) states (in part):

“Upon written request by the obligor, the servicer shall provide the obligor, to the best knowledge of the servicer, with the name, address, and telephone number of the owner of the obligation or the master servicer of the obligation.”

Remember to label your CMRRR letter a Qualified Written Request and send it to the Customer Service or Qualified Written Request address of your servicing lender and not the address where you send payments.  The servicing lender has twenty-days (excluding holidays, Saturdays, & Sundays) to acknowledge your Qualified Written Request in writing and sixty-days (again less holidays, Saturdays & Sundays) to resolve the issue or provide an explanation of why the information is correct or otherwise provide clarification on why the information is unavailable.  The servicing lender’s response is also required to provide “the name and telephone number of an individual employed by, or the office or department of, the servicer who can provide assistance to the borrower” [12 U.S.C. § 2605(e)(2)].

There is a high likelihood that the servicing lender will ignore this particular type of Qualified Written Request.  Depending on their answer or lack thereof the next step may vary.  If it’s ignored, then great – I’d fire off another and indicate that the first was ignored.  Wash, rinse, repeat – basically every month another letter is sent until it is answered and a separate damage claim if it gets to the litigation stage for failing to acknowledge receipt.

The loan servicers notate the accounts when the Qualified Written Request is sent and suddenly your file is more of a priority than it was prior to sending the letter.  So, let’s say they answer the Qualified Written Request and say that the loan is owned by ‘Such & Such National Bank Trustee”.  There, they’ve answered the request they say.  Case closed, move on.  Not so fast.  It’s true that the trustee is the legal owner of the loan and the equitable owners of the loan are the thousands of holders of mortgage backed security for the trust and you are making progress, but what you want to know now is the information sufficient to identify the pooling and servicing agreement for the securitization trust.  This will be something to the effect of SUCH AND SUCH NATIONAL BANK AS TRUSTEE FOR CRUMMY LENDER SECURITIES ASSET-BACKED PASS THROUGH CERTIFICATES, SERIES 2007-BLAH-BLAH-BLAH UNDER POOLING AND SERVICING AGREEMENT DATED MARCH 1, 2007.  How do you get that information?  You guessed it, another Qualified Written Request (there I said Qualified Written Request again for Google’s sake – hey, if you’re reading this article from a search in Google for Qualified Written Request then welcome to the Broken Credit Blog!).

OK, why do we want to be able to identify the pooling and servicing agreement for your securitization trust?  And why do servicing lenders desire to hide this information from the borrower?  The answer is because the servicing lenders are not always doing their job properly (surprise?! not!) and the pooling and servicing agreement for the securitization trust governs the types of workouts that are permitted under your group of loans.  These are 500 page documents that can be found on SEC.gov by typing the name of the securitization trust in Google. 

So, in sum, calling the lender and being persistent and polite with the lender’s loss mitigation representatives is important and necessary, but IMO knowing the answers before you call is equally important.  Might be soon that the bankruptcy judges will be able to modify these loans through principal reduction Cramdowns in bankruptcy court; however, that won’t compare to discovering that your loan is voidable through rescission and the lender has a choice to modify the loan with a deep principal reduction or alternatively receive only 10 cents on the dollar through a rescission in bankruptcy.  Maybe the time could be spent wisely by sending a few Qualified Written Requests as described above.  Who knows, you might find that your file suddenly receives preferential treatment.

Thanks for the questions and be thankful there is a breath in the house for ”[t]he Spirit of God hath made me, and the breath of the Almighty hath given me life”.  That brings me to my favorite verse: “Also I heard the voice of the Lord, saying, Whom shall I send, and who will go for us? Then said I, Here [am] I; send me”.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.