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Watt v. GMAC Mortgage-RESPA Class Action Defense Cases: Defense Motion To Dismiss RESPA Class Action Properly Granted Because RESPA Does Not Prohibit Servicer From Charging A Fee For Payoff Statements And Does Not Cap Fee Charged Eighth Circuit Holds

Federal District Court Properly Granted Defense Motion to Dismiss RESPA Class Action Because Congress did not Expressly Prohibit Servicers from Charging Fees for Payoff Statements

Borrowers filed a putative class action against GMAC Mortgage Corporation alleging that it violated the federal Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. §§ 2601-2617, “by charging a $20 fee each time the plaintiffs requested their payoff amount from GMAC’s website,” and alleging also breach of contract. The defense moved to dismiss the complaint. The district court granted the motion to dismiss the RESPA claim, but declined to exercise jurisdiction over the contract claim. The Eighth Circuit affirmed. Watt v. GMAC Mortgage Corp., 457 F.3d 781, 782 (8th Cir. 2006).

Plaintiffs argued that RESPA requires responses to “qualified written requests” be provided free of charge because RESPA does not affirmatively state that loan servicers may charge fees for such responses: “Since RESPA imposes a duty to respond but does not stated that servicers may charge fees for statements sent in response to qualified written requests, the [plaintiffs] argue, servicers are prohibited from charging fees.” Watt, at 783. The Circuit Court disagreed, holding at page 783:

RESPA does indeed establish classes of statements for which a servicers is not permitted to charge the borrowers a fee. See 12 U.S.C. § 2610; see also 24 C.F.R. § 3500.12. But responses to a qualified written request as described in § 2605 are not included in this group.

Because Congress expressly prohibited servicers from charging fees for certain statements, but did not expressly include responses to qualified written requests, RESPA did not preclude GMAC from charging a fee for providing payoff statements. Watt, at 783.

NOTE: The Circuit Court noted that plaintiffs additionally raised the alternative argument that the $20 fee was exorbitant and therefore prohibited by RESPA. Watt, at 783. However, the complaint asserted only that GMAC was required to provide the payoff statement “without any charge,” and plaintiffs did not raise the “exorbitant fee” claim until its reply brief in support of its motion for reconsideration. The Eighth Circuit therefore declined to address the issue because it had not been properly raised in the district court. Id., at 783-84.

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