Saturday, April 21, 2012

QWR: Qualified Written Request

Practice Tip for practicing Bankruptcy attorneys:  Qualified Written Request (QWR). 

      One thing we do at Nevin Law Firm is send out a QWR for any bankruptcy client who has a mortgage.  What is a QWR? Glad you asked.  A qualified written request gets its name from RESPA, the Real Estate Settlement Procedures Act.  This act, and Section 6 dealing with a QWR, was put in place to give borrowers of a mortgage a dispute resolution mechanism.  As most of us know, it is really hard to deal with large institutions such as a bank.  Always receive a recording, voicemail, put on hold, or told you called the wrong department.  Well a QWR was Congress's giving borrowers a weapon to combat this type of customer service when a borrower has a legitimate concern regarding his mortgage. Specifically, the QWR is for when a borrower is concerned that an error has occurred in calculating how much money is owed.  RESPA requires that when a QWR is received by a mortgage lender, the lender must send an acknowledgement of receipt within 5 days and answer or correct any alleged miscalucaltions and provide any requested information within 30 days (as modified by the Dodd-Frank Act).  If the bank fails to abide by these deadlines then a borrower is allowed actual damages, statutory damages (not to exceed $1,000), and attorney fees.  The bank, however, is allowed to give the borrower notice that they are extending the time to respond by up to 15 days so long as in the notice the provide reason for the delay. 

       Now, there are specific requirements of what makes a letter a QWR and just a letter.  The letter must state that it is a Qualified Written Request, state that the bank must abide by the requirements of RESPA, be mailed to the actual servicer (not servicer's attorney), and allege errors, omissions, of defects occurred in calculating payments, fees, costs, charges, notice, etc. (These requirements are not an exhaustive list). This is a great tool for attorneys because it does a number of things: (1) if it goes unanswered you get fees; (2) forces the bank to provide you with mortgage documentation so you can look for errors; and (3) allows you to dispute any differences made on a proof of claim filed by the servicer in the bankruptcy case. 

      Major Caveat!! A couple things you need to be careful about.  QWRs are not to be used as a "fishing expedition" and doing so can have the potential to adversely affect a client.  A Deed of Trust may have a provision that in a dispute the borrower is responsible for legal fees.  In such a case, if used as a "fishing expedition" and there is no actual specific error alleged, you may have added a few hundred more dollars to the balance of your clients mortgage.
      Before sending out your own QWR and taking action to recover damages and fees if no response is given, be sure to read section 6 of RESPA and research the caselaw as this article only scratches the surface.