To Be or Not to Be: The Definition of a Mortgage Servicer Comes Under Scrutiny

For purposes of RESPA, is there a difference to be had between “servicing” a loan and being a “servicer”?  The question was recently addressed by a district court from Florida. Buyea v. Select Portfolio Servicing, No. 9:16-cv-80347, 2016 U.S. Dist. LEXIS 140571 (S.D. Fla. Oct. 11, 2016). In Buyea, the consumer submitted a request for information (“RFI”) requesting the identity, address and telephone number of the current owner or assignee of the mortgage.  At the time the request was submitted, the mortgage has been in default for more than a year. The consumer filed suit alleging that the defendant violated RESPA by failing to timely and sufficiently respond to the RFI. The defendant moved to dismiss asserting that it was not a “servicer” at the time the RFI was received and that, to the extent it was a servicer, its response was timely and sufficient as a matter of law.

In support of its argument, the defendant relied upon the definitions of “servicer” and “servicing” provided in 12 U.S.C § 2605. Under RESPA, the “servicer” is the person responsible for servicing the loan. 12 U.S.C. § 2605(i)(2).  Meanwhile, “servicing” is defined as “receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan… and making the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the loan.”  12 U.S.C. § 2605(i)(3) (emphasis supplied). The defendant contended that, at the time the RFI was received, the consumer was 409 days delinquent in his mortgage payments and because the defendant was not receiving mortgage payments, it was not a “servicer” and had no obligation to respond to the RFI.

While the court agreed that the defendant was no longer servicing the consumer’s loan, it concluded that it remained a servicer and was obligated to respond to the RFI.  In reaching its conclusion, the court looked at what it considered to be a key distinction between the definitions of “servicer” and “servicing”: the term “servicer” means the person responsible for servicing the loan.  Therefore, “[w]hether or not Defendant was actively servicing the loan, Defendant remained responsible for servicing the loan at the time it received Plaintiff’s RFI.” Buyea at *10.