Weekly Real Estate News
Summary
The U.S. Court of Appeals for the Second Circuit affirmed dismissal of a mortgage borrower's RESPA damages suit against Newrez and PHH Mortgage on November 2, 2026. The majority held that disputed loan-modification charges were not damages from mortgage servicing, a $225 lawyer fee for preparing a second qualified written request was not recoverable as actual damages, and $3.20 postage was de minimis. Judge Myrna Pérez dissented in part. The ruling does not eliminate servicers' statutory response obligations.
A federal appeals court has affirmed the dismissal of a borrower’s mortgage-servicing lawsuit against Newrez and PHH Mortgage, ruling that the expenses she claimed after unanswered requests for loan information did not qualify for recovery under the Real Estate Settlement Procedures Act.
In a November 2 opinion in Murray v. Newrez LLC & PHH Mortgage Corporation, the U.S. Court of Appeals for the Second Circuit rejected three categories of damages sought by borrower Sherry Ann Murray. One judge dissented in part, arguing that the majority’s approach improperly denied recovery of expenses incurred because the servicers allegedly failed to answer her inquiries.
The decision matters to mortgage servicers, compliance teams and borrowers because RESPA imposes duties to acknowledge and respond to qualified written requests, or QWRs, concerning loan servicing. Whether a borrower can recover money for a violation is a separate question requiring proof of qualifying damages caused by that failure.
What the borrower alleged
According to the opinion, Murray sent requests for information to PHH Mortgage Corporation, identified as the servicer of her loan, and Newrez LLC, identified as its master servicer. She alleged that neither responded. A lawyer then prepared another round of requests, which Murray also said went unanswered.
Her amended lawsuit sought more than $70,277 in disputed interest and fees, $225 paid to an attorney to prepare the second request and $3.20 in postage. The U.S. District Court for the Eastern District of New York dismissed the complaint, and Murray appealed.
The appeals court affirmed the dismissal in case No. 25-2539-cv. The opinion was decided November 2; the exact public posting time was not established.
Why the majority rejected the damages
Writing for the majority, Senior Circuit Judge Jon O. Newman concluded that the more than $70,277 in disputed interest and fees resulted from a mortgage modification after missed payments, rather than from the defendants’ servicing of the loan. The court did not decide whether Murray actually owed those amounts; it held that they were not recoverable on the RESPA servicing theory presented.
The majority also rejected the $225 charge for preparing the second QWR. It reasoned that RESPA separately provides for attorney’s fees in a successful lawsuit, so the lawyer’s charge could not be counted as actual damages under the provision Murray invoked.
The $3.20 postage expense failed for a different reason: the majority considered it too small to support recovery under the de minimis doctrine. Those rulings meant Murray had not pleaded recoverable actual damages sufficient to proceed with her claim.
A dissent over the cost of trying again
Circuit Judge Myrna Pérez disagreed with the treatment of the second request. She distinguished legal work performed to obtain a servicing response from attorney’s fees incurred in litigation and argued that RESPA’s actual-damages language could encompass the $225 expense. She also rejected the idea that $3.20 in actual postage costs was automatically too small to count.
Pérez agreed that the modification-related interest and fees were not shown to result from the servicing violations alleged in the case. Her disagreement concerned the additional expenses Murray said she incurred to obtain responses after the first requests went unanswered.
What the ruling means for mortgage servicing
The decision illustrates the distinction between a servicer’s obligation to respond and the damages a borrower must establish to recover in a private RESPA action. It does not authorize servicers to ignore qualified written requests or resolve every category of RESPA damages in every jurisdiction.
For compliance departments, the practical lesson is unchanged: maintain reliable processes to receive, acknowledge, investigate and answer borrower inquiries within applicable legal deadlines. For borrowers and counsel, the opinion underscores the importance of identifying losses directly attributable to a servicing failure and of distinguishing those losses from disputes about loan origination or modification.
The Second Circuit covers federal courts in New York, Connecticut and Vermont. The ruling may inform litigation elsewhere, but it should not be described as a nationwide change to RESPA’s statutory duties.
Featured image: Illustrative mortgage paperwork and house keys, not evidence or documents from this lawsuit. Photo: Jakub Żerdzicki/Unsplash.
