Our client overpaid her mortgage for 10 months, overpaying each month by $80. After 10 months and $800, none of her overpayments were credited to principle reductions. The overpayments simply did not appear on her statements. After getting nowhere with her bank, she turned to us for help.
Challenge
Get the bank to recognize our client's mortgage overpayments and credit her account properly. The client went into the branch each month to pay her mortgage and had proof of each payment through a teller receipt, including $80 overpayments each month for 10 months. She called, wrote, and talked to more than a dozen people at this bank, but no one would credit her overpayments to her principle balance. Her statements did not reflect any unpaid fees or fines. The over payments simply disappeared.
The client's total overpayments were about $800. However, pursuing a breach of contract action (and paying an hourly attorney fee) was not feasible because it would cost much more to fight out a case in court to recover $800.
$800 at issue
$10,000 paid in damages
Bank paid $80,000 in fees
4.5 years of litigation
Solution
A federal law called RESPA had recently been amended (2010) that allowed mortgage customers to ask questions to their mortgage company about their account. Few tests of the new law had been tried in court. We decided to use RESPA and sent a formal written request under the law to the bank to ask where the money had gone. The bank failed to do any research and failed to tell us where the overpayments had gone. They had just disappeared and the bank was apparently not interested in finding out why. We alleged the bank's failure to research the missing money was a violation of RESPA, in addition to a breach of contract. That allowed us to pursue the case in court to recover for our client her $800, plus get her damages and attorneys' fees paid for by the bank. RESPA requires the bank pay if they lose.
Results
The bank fought us for several years because it wanted to test the new law. During the depositions of the bank's representatives, it was never able to tell us what happened to the money. When each side filed motions to win our cases, we initially lost. The trial court said we could not use RESPA to ask questions about the account. We thought the judge was wrong, so we appealed to the federal court of appeals. The three judges on our appellate panel unanimously reverse the trial court and established we could use RESPA to hold a bank accountable for its failures. When the case was sent back down to the trial court, the judge reconsidered his prior ruling and this time entered judgment for our client. The bank then publicly paid our client over $10,000 for her troubles and covered our firm's fees.
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