What is RESPA in a foreclosure context?
“What is RESPA in a foreclosure context?”
RESPA is a federal law that tells mortgage companies what they must do, what they cannot do, and it also allows you to challenge errors that the mortgage company makes and allows you to request an extensive amount of information from mortgage companies that they used to refuse to give you.
All of this can be the difference between not having a foreclosure and in losing your home or having to file bankruptcy to save your home from foreclosure.
Before January of 2014 (when RESPA went into effect), you had very limited rights under Alabama law. You may have had some rights under the FDCPA (Fair Debt Collection Practices Act) if your mortgage company happened to be a debt collector.
But now you have protection against almost all mortgage companies.
At least in this sense, this law requires them to be honest (shocking, I know!!) and not lie to you.
Certain steps and deadlines have to be followed for a foreclosure to happen. For example, there cannot be a foreclosure until you are more than 120 days behind. If you fill out a “loss mitigation” package for a loan modification, short sale, etc. more than a certain number of days out from the foreclosure, then the foreclosure process must stop.
The mortgage company must review your loss mitigation package and decide on it before it moves forward with a foreclosure. And you have the right to challenge the decision.
You can challenge errors/mistakes the mortgage company has made such as not applying your payments correctly, not reviewing your loss mitigation requests, etc.
You can request information from the mortgage company on your payment history, account notes, what documents they received in your loss mitigation efforts, etc.
If the company won’t follow this law, you can sue and get attorney fees as well as you getting emotional distress/mental anguish damages and you can also get statutory damages of $2,000 per violation of the law.
This gives you leverage to get the mortgage company to do the right thing.
If you have questions about your options when facing a foreclosure in Alabama, please feel free to get in touch. You can reach us by phone at 1-205-879-2447.
Or, if you prefer, you can contact us through our website and we’ll be happy to help you.
-John G. Watts
Watts & Herring, LLC
Birmingham and Madison Offices in Alabama