PUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 20-1745

ROGERS MORGAN; PATRICE L. JOHNSON, On behalf of themselves individually and on behalf of a Class and Subclass of similarly situated persons,

Plaintiffs - Appellants,

v.

CALIBER HOME LOANS, INC.,

Defendant - Appellee.

Appeal from the United States District Court for the District of Maryland, at Greenbelt. Paula Xinis, District Judge. (8:19-cv-02797-PX)

Argued: September 22, 2021 Decided: February 22, 2022

Before KING, THACKER, and RICHARDSON, Circuit Judges.

Affirmed in part, reversed in part, and remanded by published opinion. Judge Thacker wrote the majority opinion, in which Judge King joined. Judge Richardson wrote a separate opinion, concurring in part and dissenting in part.

ARGUED: Phillip R. Robinson, CONSUMER LAW CENTER LLC, Silver Spring, Maryland, for Appellants. Matthew Allen Fitzgerald, MCGUIREWOODS LLP, Richmond, Virginia, for Appellee. ON BRIEF: Melissa O. Martinez, Baltimore, Maryland, Brian E. Pumphrey, Michael W. Stark, MCGUIREWOODS LLP, Richmond, Virginia, for Appellee. THACKER, Circuit Judge:

In this case, we address whether letters sent by borrowers Rogers Morgan

(“Morgan”) and Patrice Johnson (“Johnson”) (collectively, “Appellants”) to their loan

servicer, Caliber Home Loans (“Appellee”), constitute qualified written requests

(“QWRs”) under the Real Estate Settlement Procedures Act (“RESPA”),

,

et seq., or the related Consumer Financial Protection Bureau (“CFPB”) Regulation X, 12

C.F.R. pt. 1024, such that they triggered an obligation for Appellee to cease providing

adverse information about Appellants’ accounts to credit reporting agencies.

We conclude that where a written correspondence to a loan servicer provides

sufficient information to identify the account and an alleged servicing error, such

correspondence is a QWR for the purpose of RESPA and Regulation X. Conversely, where

such written correspondence merely challenges a contractual issue, it does not implicate a

servicing issue and therefore is not a QWR pursuant to RESPA or Regulation X.

Because Morgan’s correspondence to Appellee provided sufficient detail to identify

his account and the reasons he believed account was in error, we conclude the

correspondence meets the threshold for a QWR pursuant to RESPA and Regulation X.

Accordingly, we reverse the district court’s grant of Appellee’s motion to dismiss

Morgan’s claim. However, because Johnson’s correspondence did not allege a dispute

related to the servicing of her account, it is not a QWR protected by RESPA or Regulation

X. Thus, we affirm the district court’s grant of Appellee’s motion to dismiss Johnson’s

claim.

2 I.

A.

Morgan Letter

In 1994, Morgan acquired a mortgage in order to purchase a home. Four years later,

Morgan refinanced this property with a loan from NationsBank, NA. In 2015, Appellee

purchased that loan and became Morgan’s new loan servicer.

Morgan was employed by the District of Columbia. Per the terms of Morgan’s

employment agreement, the District of Columbia periodically reviewed his credit reports.

Between 2015 and 2016, the District of Columbia expressed concerns about Morgan’s

credit reports, which reflected purported overdue home loan payments.

But, Morgan did not believe he was behind on his mortgage. Therefore, on

September 25, 2016, Morgan corresponded with Appellee (“Morgan Letter”):

Please find a report from D.C. Gov[ernment] stating as of 10/13/15 I owe Caliber $16,806[.] [A]lso on 9/20/16 I called Caliber and talked to Thomas ID#27662[.] [H]e stated I owe $30,656.89 and the $630.00 on my record is late charges. Can you please correct your records[?] Your office reporting the wrong amount to the credit agency is effecting [sic] my employment. Please correct your records.

J.A. 82. * Enclosed with this letter, Morgan included a copy of a credit report, which had

been provided to his employer. This report indicated that Morgan’s account was 120 days

past due and had a past due balance of $16,806.

* Citations to the “J.A.” refer to the Joint Appendix filed by the parties in this appeal.

3 Morgan alleges Appellee continued to report adverse loan information to credit

agencies even after receiving the Morgan Letter, which called this information into

question.

B.

Johnson Letter

On August 2, 2016, Johnson obtained a residential mortgage directly from Appellee.

When Johnson fell behind on her mortgage payments, Appellee began reporting this

adverse information to credit reporting agencies. In September 2018, Johnson applied for

a loan modification for lower payments. In response, Appellee initially placed Johnson on

a trial payment plan, a preliminary step toward approval of a loan modification. The

purpose of the trial payment plan was to provide Johnson the opportunity to demonstrate

she could make three timely, reduced payments. Although Johnson made the payments

required by the trial payment plan, in November 2018, Appellee nonetheless declined to

finalize the loan modification, citing the existence of a priority lien by a solar panel

company.

On February 11, 2019, Johnson sent Appellee a letter (“Johnson Letter”),

challenging the existence of “title issues” due to the solar panel company lien and asking

Appellee to “conduct a reasonable investigation into these matters and correct your errors.”

J.A. 87. The Johnson Letter further requested “an accounting of all sums you have imposed

upon and collected related to my loan including convenience fees for accepting payment

over the phone and property inspection fees.”

at 87–88. In response, Appellee revisited

the possibility of a loan modification, and the parties ultimately finalized a loan

4 modification agreement on April 26, 2019. Yet, in the interim, Appellee declined to stop

reporting adverse information about Johnson’s purported delinquent payments on her home

loan to credit reporting agencies.

C.

Procedural History

In September 2019, Appellants filed claims against Appellee, both individually and

on behalf of a putative class of “all residential loan borrowers” who submitted QWRs per

RESPA and Regulation X to Appellee in the preceding three years. As detailed below,

when a loan servicer receives a QWR, the servicer is required by RESPA and Regulation

X to temporarily stop reporting adverse information about the borrower’s loan payments

to credit reporting agencies. Appellants contend that despite the fact that they sent QWRs

to Appellee, Appellee continued to report adverse information on Appellants’ loans to

credit reporting agencies in contravention of RESPA.

Before the district court, Appellee filed a motion to dismiss Appellants’ claims.

Appellee argued the Morgan Letter is not a QWR because it does not dispute a specific

payment, which Appellee contends is required by RESPA. Appellee also argued that the

Johnson Letter is not a QWR because it only disputes a potential loan modification, which

is not protected by RESPA. On June 10, 2020, the district court granted Appellee’s motion

to dismiss. Given that the district court dismissed Appellants’ individual claims, it also

dismissed Appellants’ related class action claims. Appellants timely appealed.

5 II.

We review a district court’s grant of a motion to dismiss de novo. Fairfax v. CBS

Corp.,

(4th Cir. 2021). “In doing so, we accept as true the well-pled

allegations of the complaint and construe the facts and reasonable inferences derived

therefrom in the light most favorable to the plaintiff.” Harbourt v. PPE Casino Resorts

Md., LLC,

(4th Cir. 2016).

III.

A.

RESPA and Regulation X

In relevant part, RESPA provides that loan servicers have a duty to respond to any

QWR received from borrowers “for information relating to the servicing of the loan.”

(e). Further, when a loan servicer receives a QWR, that servicer has a duty

to refrain from “provid[ing] information regarding any overdue payment, owed by such

borrower and relating to such period [of sixty days from the servicer’s receipt of a QWR]

or [QWR], to any consumer reporting agency.”

The CFPB has enforcement authority for RESPA. The CFPB has issued Regulation

X to interpret and implement RESPA. Regulation X provides guidance with regard to

QWRs that assert an error, as well as guidance with regard to what constitutes “servicing.”

6 B.

Qualified Written Requests

Per RESPA,

[A] qualified written request shall be a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that—

(i) includes, or otherwise enables the servicer to identify, the name and account of the borrower; and

(ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.

(e)(1)(B). In turn, Regulation X provides:

A servicer shall comply with the requirements of this section for any written notice from the borrower that asserts an error and that includes the name of the borrower, information that enables the servicer to identify the borrower’s mortgage loan account, and the error the borrower believes has occurred. A notice on a payment coupon or other payment form supplied by the servicer need not be treated by the servicer as a notice of error. A qualified written request that asserts an error relating to the servicing of a mortgage loan is a notice of error for purposes of this section, and a servicer must comply with all requirements applicable to a notice of error with respect to such qualified written request.

(a). As to what constitutes an error, Regulation X details 11 specific

categories of errors (e.g., failure to accept payment, imposition of fees without a reasonable

basis, failure to provide an accurate payoff balance amount upon borrower’s request), as

well as a catchall category of “any other error relating to the servicing of a borrower’s

mortgage loan.”

7 In Poindexter v. Mercedes-Benz Credit Corp.,

(4th Cir. 2015), we

addressed what constitutes a QWR pursuant to RESPA. To qualify as a QWR, a document

must be a “written correspondence” that contains either (1) a “statement of the reasons” for

the borrower’s belief the account is in error or (2) “sufficient detail” regarding the

information requested by the borrower. Poindexter v. Mercedes-Benz Credit Corp.,

(4th Cir. 2015) (emphasis deleted) (quoting

(e)(1)).

Further, a QWR “must identify the ‘account of the borrower’ that is disputed.”

However, RESPA does not require the borrower to explicitly state details such as the

account number; rather, it allows for the QWR to include information that “otherwise

enables the servicer to identify” the account.

(e)(1)(B)(i).

C.

Servicing

Pursuant to RESPA:

The term “servicing” means receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan, including amounts for escrow accounts described in [

], 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.

(i)(3). RESPA provides that a servicer shall not “fail to take timely action

to respond to a borrower’s requests to correct errors” related to servicing, such as “errors

relating to allocation of payments, final balances for purposes of paying off the loan, or

avoiding foreclosure, or other standard servicer’s duties.”

§ 2605(k)(1)(C).

Regulation X further defines “servicing” as:

8 receiving any scheduled periodic payments from a borrower pursuant to the terms of any federally related mortgage loan, including amounts for escrow accounts under [

], and making the payments to the owner of the loan or other third parties 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 mortgage servicing loan documents or servicing contract. In the case of a home equity conversion mortgage or reverse mortgage as referenced in this section, servicing includes making payments to the borrower.

.

D.

Appellants’ Letters

The district court concluded (1) the Morgan Letter is not specific enough to

constitute a QWR; and (2) the Johnson Letter is not a QWR because it “challenges only

[Appellee’s] stated denial for the loan modification,” which “does not implicate servicing

of the loan.” J.A. 165.

1.

Is the Morgan Letter a QWR?

Here, the district court concluded the Morgan Letter is not a QWR. This was error.

First, the district court erred by concluding the Morgan Letter is not a QWR and does not

“trigger[] RESPA’s prohibition on credit reporting” because it does not “dispute specific

payments.” J.A. 142. RESPA does not limit the reporting of overdue payments to disputes

of specifically identified payments but includes any “qualified written request relating to a

dispute regarding the borrower’s payments.”

(e)(3). We conclude that

the Morgan Letter is a QWR subject to RESPA, as it is “a written correspondence” that

9 articulates a “statement of reasons” in “sufficient detail” to indicate to Appellee why

Morgan believed the credit reporting was in error.

§ 2605(e)(1)(B); see also Poindexter,

.

Specifically, the Morgan Letter includes the name, account number, and other

information that would “enable[] the servicer to identify” the account, and it includes

“reasons for the belief of the borrower, to the extent applicable, that the account is in error.”

(e)(1)(B). Morgan described the conflicting balance information he had

received from his employer’s reports, showing that he “owe[d] [Appellee] $16,806,” and

Appellee’s representative, who allegedly identified the balance as “$30,656.89” in addition

to “$630.00 on [his] record” for “late charges.” J.A. 82.

Further, the district court erred by concluding the Morgan Letter is not a QWR due

to a “lack of specificity.” J.A. 164. The Morgan Letter is not a general or vague complaint.

To the contrary, as noted, the Morgan Letter includes an account number, as well as a

reference to an agent and that agent’s ID number related to a specific phone call Morgan

had with a representative of Appellee to discuss the conflicting balance information.

Although oral communications are not, by themselves, sufficient to create a QWR, see

Poindexter,

, the reference to an oral communication here provided specific

information that could have “otherwise enable[d] the servicer to identify” the account at

issue.

(e)(1)(B). More importantly, the Morgan Letter does not rely

solely on this alleged phone call with Appellee’s representative as the basis for the

description of the problem. The Morgan Letter also details conflicting balance information

received from Appellee and the credit reporting service. Although the Morgan Letter does

10 not state which amount, if either, is the correct amount, this type of discrepancy is sufficient

to indicate a dispute exists as to the servicing of loan. Morgan’s request for Appellee to

“correct [their] records” clearly stems from the confusion presented about his account

balance and his belief that Appellee’s “office is reporting the wrong amount to the credit

agency.” J.A. 82.

Therefore, the facts taken in the light most favorable to Morgan are sufficient at this

stage to survive a motion to dismiss. Accordingly, we reverse the district court’s dismissal

of Morgan’s claim and those of the related putative class and remand for further

proceedings.

2.

Is the Johnson Letter a QWR?

According to Appellee, the Johnson Letter is not a QWR because it is merely

contesting Appellee’s denial of Johnson’s loan modification. The district court agreed with

Appellee and dismissed the complaint relative to Johnson’s claim. The key question in this

case with respect to the Johnson Letter is whether “servicing” for the purpose of RESPA

includes disputes about potential loan modifications.

Although we have not directly addressed the issue of whether a modification, or

potential modification, of a contract constitutes servicing protected by RESPA, we have

previously found the Ninth Circuit’s treatment of the issue in Medrano v. Flagstar Bank,

FSB,

(9th Cir. 2012), to be instructive. Poindexter,

. In

Medrano, the Ninth Circuit concluded RESPA “distinguishes between letters that relate to

borrowers’ disputes regarding servicing, on the one hand, and those regarding the

11 borrower’s contractual relationship with the lender, on the other.”

.

Consequently, the Ninth Circuit held that “challenges to the terms of the loan and mortgage

documents” are not disputes regarding servicing under RESPA.

Similarly, in

Poindexter v. Mercedes-Benz Credit Corp., we emphasized that “servicing” is limited to

“the receiving or making of loan payments” and is not related to “the terms of the loan and

mortgage documents.”

(citing

(i)(3)). Thus,

correspondence limited to the dispute of contractual issues that do not relate to the servicing

of the loan, such as loan modification applications, do not qualify as QWRs.

A loan modification is a contractual issue, not a servicing matter. The Johnson

Letter does not relate to any dispute of Johnson’s payments, or assert an error related to the

servicing of the loan. See

(k)(1)(C) (stating that a servicer must “respond

to a borrower’s requests to correct errors relating to allocation of payments, final balances

for purposes of paying off the loan, or avoiding foreclosure, or other standard servicer’s

duties”). Rather, the Johnson Letter merely challenges the denial of a modification of the

terms of Johnson’s loan. The only error alleged in the Johnson Letter is denial of the loan

modification based on title issues regarding the solar panel company lien. This does not

fall within the ambit of “servicing” so as to trigger RESPA’s protections against providing

adverse information to credit reporting agencies.

Johnson points to Naimoli v. Ocwen Loan Servicing, LLC,

(2d Cir.

2022), as support for her argument that RESPA is applicable to her situation. In Naimoli,

a loan servicer denied a loan modification after the servicer lost a borrower’s loan

documents. 22 F.4th at 383. The Second Circuit concluded that the mismanagement of

12 documents is an error “related to” servicing of the borrower’s loan and is consequently

covered by the protections of RESPA. Id. But, importantly, the Second Circuit’s holding

is still limited to servicing errors. The Second Circuit held the identification of “errors

while in pursuit of a loss mitigation option does not impair their connection to the servicing

of [the borrower’s] loan,” as it was the “loss of the loan documents [that] made [the

borrower] ineligible for the loan modification” and in turn “jeopardized [the servicer’s]

ability to make payments to the loan’s owners in the event of a foreclosure.” Id. Moreover,

“the errors [the borrower] identified were correctable without overturning [the servicer’s]

determination regarding her loss mitigation application, because [the servicer] could

simply have located and recorded the documents without changing its decision regarding

loss mitigation.” Id. Therefore, Naimoli is unavailing here.

Even taken in the light most favorable to Johnson, the Johnson Letter cannot

constitute a QWR. As a result, we affirm the district court’s dismissal of Johnson’s claim.

IV.

For the reasons set forth above, we hold the district court erred in granting

Appellee’s motion to dismiss Morgan’s claim. Accordingly, we reverse and remand for

further proceedings consistent with this opinion. However, we affirm the district court’s

grant of Appellee’s motion to dismiss Johnson’s claim.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED

13 RICHARDSON, concurring in part and dissenting in part:

I largely agree with my colleagues. But I disagree that the Morgan letter constitutes

a “qualified written request” triggering protection under the Real Estate Settlement

Procedures Act. The Act requires, among other things satisfied here, a “statement of the

reasons for the belief of the borrower . . . that the account is in error.”

(e)(1)(B)(ii). The Morgan letter fails to identify the believed error and provides no

“statement of the reasons” for believing that unidentified error exists.

Let’s start with the servicing error itself. The letter does not identify what the

alleged error might be. See

(a). As the majority points out, the letter

does identify two balances about a year apart. First, the D.C. Government identified the

balance in October 2015 as $16,806. And then Caliber identified a September 2016

balance of $30,656.89 plus $630 in late charges.

After identifying two balances, Morgan claims that Caliber was “reporting the

wrong amount to the credit agency.” J.A. 82. But only the lower balance ($16,806) came

from a credit report. So the letter seems to suggest that lower balance must be the “wrong

amount,” meaning the higher ($30,656) balance must be correct. But that cannot be. It

would hardly make sense for Morgan to complain that Caliber erred in providing the credit

agency with too low of a balance. One might alternatively stretch to read Morgan’s letter

to allege that Caliber’s $30,656 balance was the “wrong amount” but then it is hard to

understand from the letter what is wrong with the $16,806 balance that came from a credit

report. Either way, neither reading reflects the error Morgan believed existed. Morgan

explains—in the complaint, not the letter—that the loan had been fully paid off so he

14 apparently believed that both balances referenced in the letter were wrong. But there is no

way to glean that error from the letter.

Even if I strained to read Morgan’s letter as claiming both listed amounts were

wrong, the letter does even less to provide a “statement of reasons” for that belief.

§ 2605(e)(1)(B)(ii). While precision is not required, there are no reasons provided. And

an asserted error without reasons is not a qualified written request.

Nor can a borrower meet his duty to provide “reasons” by providing bits and pieces

of information that the servicer might puzzle together to identify the borrower’s belief and

reasons. That lower bar only applies to the name and account of the borrower. A letter

can either include the “name and account” or “otherwise enable[] the servicer to identify”

the name and account. § 2605(e)(1)(B)(i). But subsection (ii) omits any language

permitting the borrower to only provide clues that “otherwise enable the servicer to

identify” the error or reasons for it. Instead, it requires that the “statement of reasons” for

the belief of error must be included. § 2605(e)(1)(B)(ii). *

A “qualified written request” must include a “statement of the reasons for the belief

of the borrower . . . that the account is in error.” § 2605(e)(1)(B)(ii). Morgan’s letter fails

to identify what he believed the error to be and provides no statement of reasons for his

belief. So I respectfully dissent in part.

* Nor does the second clause of subsection (ii) benefit Morgan. Subsection (ii) may be satisfied by (A) including a statement of reasons for the belief of error, or (B) providing “sufficient detail” regarding “other information sought.” Poindexter v. Mercedes-Benz Credit Corp.,

(4th Cir. 2015) (quoting § 2605(e)(1)(B)(ii)). Morgan’s letter does not seek any information, so the “sufficient detail” clause does not apply. 15