If a mortgage servicer fails to comply with its obligations under the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. 2601, et seq., or its implementing regulations, a borrower may recover “any actual damages . . . as a result of the failure.” 12 U.S.C. 2605(f)(1)(A). Thus, to prevail on a RESPA claim, a borrower must show “actual damages” sustained as a result of the failure to comply. What constitutes “actual damages” has been the subject of a litany of recent decisions involving RESPA claims. In Baez v. Specialized Loan Servicing, LLC, 2017 WL 4220292 (Sept. 22, 2017), the Eleventh Circuit provided more clarity on the scope of “actual damages” under the statute.

Jaki Baez took out a mortgage loan in 2005, and Specialized Loan Servicing (“SLS”) took over the servicing of the loan a few years later. In January 2015, Baez stopped paying her mortgage to see if she could qualify for a loan modification agreement. She retained a law firm to both help with any ensuing foreclosure and to achieve a loan modification. She agreed to pay the firm a flat fee of $400 per month in connection with those efforts. In September 2015, Baez, through her attorney, sent a written request for information under 12 C.F.R. 1024.36(a) (part of RESPA’s implementing Regulation X, 12 C.F.R. part 1024) to SLS, in which she asked for information about her mortgage loan. SLS acknowledged the letter and later submitted a packet of information in response, but Baez claimed that the packet was deficient because it did not contain a file with SLS’s communications with her. Soon after receiving SLS’s purportedly deficient response, Baez filed suit under RESPA. The trial court granted summary judgment in favor of SLS, finding that Baez failed to show that she had been injured by SLS’s response to her request for information. Baez appealed, and the Eleventh Circuit affirmed.

In reaching its decision, the Court began its analysis with the maxim that for actual damages to arise as “a result of” a servicer’s noncompliance, a plaintiff must show a “causal link” between the alleged noncompliance and her damages. Assuming for purposes of its analysis that SLS’s response to Baez’s request for information failed to comply with RESPA and its implementing regulations, the Court agreed with the trial court that Baez failed to show that any of her alleged actual damages had a causal link to SLS’s alleged violations. The Court considered each of the sources of actual damages alleged by Baez in turn.

First, Baez argued that she paid $4.70 in postage to initially send the request for information in the first place. The Court rejected Baez’s argument that such postage qualifies as a cost to the borrower “as a result of the failure” to comply with a RESPA obligation. Declining Baez’s obligation to follow Sixth Circuit precedent to the contrary, the Court observed that the postage cost for sending a request for information is the same regardless of whether the servicer’s ultimate response to that request is sufficient. Accordingly, the Court concluded that the postage cost of sending a request for information cannot qualify as actual damages under RESPA because “a cost that is incurred whether or not the servicer complies with its obligations is not a cost that is caused by, or ‘a result of,’ the failure to comply.”

Second, the Court rejected Baez’s argument that the monies she paid her attorneys to review SLS’s deficient response qualified as actual damages. Because Baez had hired her law firm on a flat monthly fee and there was no evidence that Baez incurred any additional representation costs as a result of SLS’s allegedly deficient response, Baez could not show that she suffered any “actual damages . . . as a result of” SLS’s alleged failure to comply with RESPA.

Finally, Baez argued that SLS’s allegedly deficient response—specifically its failure to produce all of its letters to Baez—caused her to forego immediately bringing other RESPA claims alongside her claim for failure to adequately respond to her request for information. The Court questioned whether RESPA’s actual damages requirement could be satisfied by allegedly depriving a borrower of the information needed to pursue more RESPA claims. The Court noted that it had previously recognized that actual damages may be established by a borrower for purposes of RESPA if the servicer’s deficient response “prevented her from taking some important action.” Bates v. JPMorgan Chase Bank, N.A., 768 F.3d 1126, 1135 (11^th Cir. 2014). The Court also observed, however, that there is still a need for causation, and that under United States Supreme Court precedent, a plaintiff only obtains standing by establishing a “concrete injury even in the context of a statutory violation.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549 (2016).  Unfortunately for those seeking clarity in the reaches of RESPA law, however, the Court ultimately declined to resolve that issue, because Baez did not properly preserve that basis of her alleged actual damages for appeal.

Servicers can breathe a sigh of relief after Baez if only for the Court’s determination regarding postage fees. That issue has come up frequently in recent litigation, with borrowers often pointing to the Sixth Circuit’s view that actual damages can include the initial costs of preparing and sending a request for information where the servicer later gives a deficient response. See Marais v. Chase Home Finance LLC, 736 F.3d 711, 721 (6^th Cir. 2013). Now, courts in the Eleventh Circuit can easily disregard such postage fees as an independent and sufficient basis to satisfy the “actual damages” requirement of RESPA claims. The aspects of Baez dealing with attorney’s fees and deprival of information necessary to make other RESPA claims are less impactful, due to the specific factual context in which those issues came up in Baez, but may still be helpful to servicers in resolving similar issues down the road.