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Pattern or Practice of Noncompliance

Pursuant to Section 2605(f) of the Real Estate Settlement Procedures Act, individuals have a private right of action against loan servicers for violations of Section 2605. A loan servicer that is in violation of Section 2605 is liable to that individual in “an amount equal to the sum of – (A) any actual damages to the borrower as a result of the failure; and (B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $2,000.” 12 U.S.C. § 2605(f)(1).

Case law is sparse regarding what the term “pattern or practice of noncompliance” means. In Almquist v. Nationstar Mortg., LLC., 14-81178-CIV-RYSKAMP/HOPKINS (S.D. Fla. 2014), Judge Ryskamp found that two (2) violations were sufficient allege a pattern or practice of noncompliance. However, in McLean v. GMAC Mortg. Corp., 595 F.Supp.2d 1360 (S.D. Fla. 2009), Magistrate Judge O’Sullivan held that two (2) violations were insufficient to allege a pattern or practice of noncompliance. There is clearly a split of authority.

Some courts have interpreted the term “pattern or practice” to mean a “standard or routine way of operating.” See McLean v. GMAC Mortg. Corp., 595 F.Supp.2d 1360, 1366 (S.D. Fla 2009); In re Maxwell, 281 B.R. 101 (D. Mass. 2002). But even this definition is vague. Very few courts have delved into the actual meaning behind the term. Does it mean a “pattern or practice” of noncompliance specific to an individual borrower or does it reflect more of a widespread way of operating? It remains to be seen what courts are truly looking for in order to award an individual statutory damages under RESPA.