Key Points

  • The Second Circuit affirmed dismissal of a RESPA suit against Newrez LLC and PHH Mortgage Corporation over their failure to acknowledge or respond to a borrower's qualified written requests.
  • Interest and fees added to the borrower's debt through a mortgage modification had nothing to do with servicing and are not recoverable under RESPA; the panel was unanimous on this point.
  • The majority held that the $225 attorney's fee for preparing a second request is not 'actual damages' under 12 U.S.C. § 2605(f)(1)(A), because § 2605(f)(3) provides for attorney's fees in addition to actual damages and only in a successful action.
  • The majority rejected the $3.20 postage claim under the de minimis doctrine.
  • Judge Pérez dissented in part, arguing that fees for pre-suit work seeking a servicing response are actual damages under the nature-of-the-work approach of Key Tronic, and that RESPA's 'any actual damages' language sets no minimum.

A federal appeals court ruled Monday that a homeowner whose mortgage servicers ignored her written requests for information cannot recover the $225 she paid a lawyer to send the requests a second time. The court held that the federal mortgage law at issue lets a borrower collect attorney's fees only after winning a lawsuit.

A divided panel of the U.S. Court of Appeals for the Second Circuit also rejected the borrower's claim for $3.20 in postage as too small for the law to notice. Senior Circuit Judge Jon O. Newman wrote for the majority, joined by Circuit Judge Wesley. Circuit Judge Myrna Pérez dissented in part. The decision affirms the dismissal of a suit brought by Sherry Ann Murray against Newrez LLC, which does business as Shellpoint Mortgage Servicing, and PHH Mortgage Corporation.

The Real Estate Settlement Procedures Act, or RESPA, requires a mortgage servicer to acknowledge and answer a qualified written request, a borrower's written inquiry about the servicing of the loan. A servicer that fails to comply is liable for "any actual damages to the borrower as a result of the failure." A separate provision shifts reasonable attorney's fees and costs onto the servicer "in the case of any successful action under this section." Under the majority's reading, a lawyer's fee for a pre-suit follow-up request falls under the second provision, so a borrower who loses the suit cannot recover it as damages.

According to the opinion, Murray sent a request to PHH, the servicer of her loan, and to Newrez, the master servicer, and received no responses. The lawyer who prepared that request then prepared a second one. Again she received nothing.

Murray sued in the Eastern District of New York. Her second amended complaint sought more than $70,277.15 in interest and fees added to her loan balance, plus the $225 legal fee and the $3.20 postage for the second request. U.S. District Judge Allyne R. Ross denied all relief and dismissed the complaint. Ross had earlier dismissed a first amended complaint, with leave to amend, because Murray "failed to allege damages."

All three judges agreed that the $70,000-plus was not recoverable. The charges resulted from a modification of Murray's mortgage after she missed several monthly payments. "Whether or not the plaintiff is liable for the added interest and fees, they were added to her debt as a result of a mortgage modification and had nothing to do with servicing the mortgage," Newman wrote. Pérez added that the costs of the first requests, incurred before any violation, were not recoverable.

The panel split over the second request. Newman wrote that attorney's fees are not actual damages under RESPA because the statute provides for fees "[i]n addition to" actual damages. Citing decisions of the Fifth Circuit and a California federal court, he also invoked the rule of statutory interpretation that a specific provision governs over a general one. Because the fee provision applies only to a successful action, and Murray "has not prevailed in this action," the $225 was unrecoverable, Newman wrote.

"Sherry Ann Murray asked the servicers of her mortgage for information about her loan. They ignored her," Pérez wrote at the start of the dissent, which argued that the fee provision reaches only fees "incurred in connection with such action," meaning the lawsuit, and that a follow-up request can seek a servicer's compliance without preparing for litigation. "The distinction concerns the nature of the work performed, not merely whether it occurred before suit," Pérez wrote.

Pérez relied on Key Tronic Corp. v. United States, a 1994 Supreme Court decision under the federal environmental cleanup statute. There, the justices held that fees for prosecuting a cost-recovery suit were not recoverable, but fees for identifying other responsible polluters were, because that work was distinct from litigation.

Newman responded in a footnote that the statutes in Key Tronic, unlike RESPA, did not make recoverable actual damages "in addition" to attorney's fees. Pérez had argued that the specific-over-general canon gives priority to a specific provision only where two provisions cover the same matter, and "does not expand what the specific provision covers." "The specific and general provisions, even on the dissent's view, cover the same subject, and, if so, the specific provision controls," Newman replied.

On the postage, Newman applied the maxim "de minimis non curat lex," which the opinion translates as "the law does not take account of trifles," citing the Supreme Court's 2014 decision in Sandifer v. U.S. Steel Corp. Pérez noted that RESPA caps additional damages for a pattern or practice of noncompliance at $2,000 and sets no floor for actual damages. "That modest cap shows both that Congress knew how to specify a monetary limit and that it contemplated private actions involving comparatively small sums," Pérez wrote.

"We see no reason why a maximum on recoverable damages indicates that Congress wanted to burden federal courts with a de minimis claim of $3.20 for postage," Newman wrote, citing a 2024 Massachusetts federal court decision that disallowed postage for a second request on the same ground.

Pérez wrote that "a real, out-of-pocket expense does not become any less actual because it is modest." The dissent acknowledged in a footnote that "A lawsuit over $3.20 alone is unlikely given the expense of litigation." In Pérez's view, the statute permits recovery of the full $228.20.

Murray was represented by Steven Amshen of Petroff Amshen LLP. The servicers were represented by Ali Degan of Hinshaw & Culbertson LLP.

The ruling leaves the dismissal of Murray's suit in place. Pérez would have vacated the judgment and sent the case back to the district court, where, the dissent said, the servicers could have contested whether Murray incurred the expense and whether the lawyer's work aimed to obtain a servicing response rather than to prepare litigation. "If proven, those losses are what Congress authorized borrowers to recover," Pérez wrote.