§ 1024.35(h)

Section-by-section analysis

35(h) Payment Requirements Prohibited

Proposed § 1024.35(h) would have prohibited a servicer from charging a fee, or requiring a borrower to make any payment that may be owed on a borrower's account, as a condition of investigating and responding to a notice of error. Proposed comment 35(h)-1 would have clarified that § 1024.35(h) does not alter or otherwise affect a borrower's obligation to make payments owed pursuant to the terms of the mortgage loan. The Bureau proposed § 1024.35(h) for three reasons. First, section 1463(a) of the Dodd-Frank Act added section 6(k)(1)(B) to RESPA, which prohibits a servicer from charging fees for responding to valid qualified written requests. Proposed § 1024.35(h) would implement that provision with respect to qualified written requests. Second, the Bureau believes that a servicer's practice of charging for responding to a notice of error impedes borrowers from pursuing valid notices of error and that the prohibition is therefore necessary and appropriate to achieve the consumer protection purposes of RESPA, including ensuring responsiveness to borrower requests and complaints. Third, the Bureau understands that, in some instances, servicer personnel have demanded that borrowers make payments before the servicer will correct errors or provide information requested by a borrower. The Bureau believes that a servicer should be required to correct errors notwithstanding the payment status of a borrower's account. A consumer advocacy group commenter noted, without elaborating, that it supported the fee prohibition reflected in proposed § 1024.35(h). For the reasons set out above, the Bureau is adopting § 1024.35(h) and comment 35(h)-1 as proposed.