The U.S. Court of Appeals for the Second Circuit recently upheld a lower court's decision to dismiss a case involving Sherry Ann Murray and mortgage servicers Newrez LLC and PHH Mortgage Corporation. The court's ruling, made on November 2, 2026, centers around claims made under the Real Estate Settlement Procedures Act (RESPA). This decision affects borrowers who seek damages for improper handling of mortgage servicing requests.

Murray, the plaintiff in this case, alleged that the defendants failed to respond to her requests for information regarding her mortgage, which led to increased fees and interest on her loan. The court's ruling clarifies the limits of what borrowers can claim under RESPA when servicers do not comply with their obligations.

Background

The parties involved in this case are Sherry Ann Murray, who took out a mortgage serviced by PHH Mortgage Corporation and managed by Newrez LLC, and the two companies themselves. The dispute arose after Murray sent a Qualified Written Request (QWR) to her mortgage servicers, seeking information about her account. When she did not receive a response, she sent a second QWR, incurring additional costs in the process.

Murray's complaints included claims for damages exceeding $70,000 due to improper fees and interest added to her loan balance. She also sought reimbursement for legal fees incurred while preparing the second QWR and postage costs for sending it. The case was initially dismissed by the District Court for the Eastern District of New York, which found that Murray did not sufficiently allege damages. Murray then appealed the decision to the Second Circuit.

The Ruling

The Second Circuit Court of Appeals affirmed the lower court's dismissal of Murray's claims. The court ruled that the fees and interest Murray claimed were not recoverable under RESPA, as they were related to a mortgage modification rather than the servicing of the loan itself. The court stated, "Whether or not the plaintiff is liable for the added interest and fees, they were added to her debt as a result of a mortgage modification and had nothing to do with servicing the mortgage. They are therefore not recoverable in a RESPA action."

Additionally, the court addressed Murray's claim for the $225 legal fee and $3.20 postage. The court ruled that the legal fee was not considered "actual damages" under RESPA because the statute specifies that attorney fees can only be recovered in successful actions. The court noted, "A orney’s fees are not actual damages under RESPA because the statute provides for such fees '[i]n addition to' actual damages." The court also dismissed the postage claim, citing the principle of de minimis non curat lex, meaning that the law does not concern itself with trivial matters.

Impact

This ruling has significant implications for borrowers under RESPA. It clarifies that claims for damages must be directly related to the servicing of a mortgage, and that costs incurred in preparing follow-up requests do not qualify as recoverable damages unless they are linked to a successful action. The decision may discourage borrowers from pursuing small claims related to minor expenses, as the court has set a precedent that such claims may not be worth the legal effort.

The court's interpretation of RESPA could also influence how mortgage servicers respond to QWRs in the future. By establishing that certain costs are not recoverable, the ruling may lead servicers to be less responsive to borrower inquiries, knowing that they may not face significant financial consequences for failing to respond.

What's Next

While the court's ruling is final, it is possible that Murray could seek further legal recourse. However, details were not available in the court filing regarding any potential appeals or related cases. The outcome of this case serves as a reminder for borrowers to be aware of their rights under RESPA and the limitations of claims they can pursue against mortgage servicers.