Second Circuit tells borrower her servicer’s silence costs her nothing
Under the majority’s logic, the dissent pointed out, a borrower who pays a housing counselor $225 to prepare a follow-up request could recover that cost, but a borrower who pays an attorney the same amount for the same work could not. The outcome would turn entirely on who performed the work, not what the work actually was.
The dissent argued that the attorney’s fees section of RESPA covers fees “incurred in connection with” litigation – things like researching a lawsuit, drafting a complaint, pursuing an appeal. Preparing a follow-up servicing request falls outside that scope. It is compliance work, not legal work in the litigation sense, regardless of who does it.
Too small to matter
That left the $3.20 for postage. The majority invoked the old legal maxim that the law does not concern itself with trifles and declined to let a claim that small take up federal court time.
The dissent pushed back, noting that Congress wrote “any actual damages” into the statute with no minimum dollar amount. Congress also capped additional damages for patterns of servicer noncompliance at $2,000, showing it anticipated actions involving small sums. A $3.20 postage expense is still an actual loss, the dissent argued, if it meets the statute’s other requirements.
What servicers should take from this
For servicers and compliance teams, the decision draws a bright line: costs that flow from a loan modification will not be recharacterized as servicing damages under RESPA in the Second Circuit, and pre-litigation costs a borrower incurs chasing an unanswered request will not count as “actual damages” – at least for now.
