7th Cir. Rules Borrowers Alleged Enough for Standing, But RESPA Claim Failed at Summary Judgment Due to Lack of Damages

This subject is courtesy of Lexology author Richard Payne and Maurice Wutscher LLP.

Essentially, to recover with respect to alleged RESPA violations concerning qualified written requests (QWRs) under 12 U.S.C. § 2605(e), it is insufficient for the plaintiff borrower to show that the defendant mortgage servicer/lender failed to properly respond to the borrower’s QWR without a causal connection to the alleged damages. But how is this determined?

In this case, the Seventh Circuit applied a two-prong test.

First, the borrower must have standing to bring the claim where “[t]he plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016); then clarified that the injury be concrete and not a “bare procedural violation divorced from any concrete harm.” Spokeo, 136 S. Ct. 1540.

Second, assuming that damages do exist, then there must be a causal connection between the servicer/lender’s failure to properly respond to the QWR and the damages claimed: “[a]lleging injury for purposes of standing is not the same as submitting adequate evidence of injury under the statute to survive a motion for summary judgment,” and “[w]hether the allegations are sufficient to overcome a motion for summary judgment is a different matter entirely.” Diedrich v. Ocwen Loan Servicing, LLC Court of Appeals, 7th Circuit, 2016.

In sum, it would appear that bare technical violations of failing to properly respond to a QWR will not in themselves provide standing and relief without some causal connection to the damages alleged. But, the story doesn’t end there. Causal connection can be a very gray and ultimately a question of fact which would better allow the plaintiff borrower to survive a defendant servicer/lender’s motion for summary judgment.

Note:  The views expressed are solely the opinion of the author.

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