On June 17, 2025, the United States District Court for the District of Rhode Island dismissed pro se plaintiffs’ claims against the Rhode Island Housing and Mortgage Finance Corporation (R.I. Housing) for alleged violations of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq. (RESPA).
Background
The married plaintiffs acquired a mortgage from R.I. Housing in September 2023. As part of the mortgage agreement, R.I. Housing established an escrow account and provided plaintiffs assistance with a down payment grant. In September 2024, Plaintiffs alleged that there were several “irregularities” in their escrow account, including a surplus notation. Plaintiffs contended that this surplus should have been applied to the mortgage instead of their escrow account.
After filing a complaint with the Consumer Financial Protection Bureau (CFPB), R.I. Housing investigated the matter and found that the surplus was erroneously credited to plaintiffs’ account. Following this decision, Plaintiffs filed a Qualified Written Request (QWR) to obtain R.I. Housing’s records related to their investigation.
After receiving the records and determining that they were “incomplete,” Plaintiffs sued R.I. Housing in Providence Superior Court, alleging, inter alia, RESPA violations and breach of fiduciary duty. Plaintiffs claimed that R.I. Housing mismanaged their escrow fund and failed not only to correct those errors but also to promptly notify and advise plaintiffs. R.I. Housing removed the case to federal court and subsequently moved to dismiss pursuant to Fed. R. Civ. P. 12(b)(6).
Analysis and Decision
Ruling in favor of R.I. Housing, the court dismissed plaintiffs’ RESPA claims. The court also declined to exercise supplemental jurisdiction over the remaining state law claims and remanded them to state court.
Regarding the escrow mismanagement claims, the court found that plaintiffs had not stated any plausible violations of RESPA. Per the relevant provision of the RESPA statute, 12 U.S.C. § 2605(g), plaintiffs needed to allege that R.I. Housing failed to make payments from the escrow account in a timely manner or that it failed to promptly return a balance to plaintiffs after the mortgage was paid off. Plaintiffs’ Complaint set forth neither allegation; therefore, the court dismissed plaintiffs’ RESPA claims under 12 U.S.C. § 2605(g).
Additionally, the court found that plaintiffs’ Complaint failed to plausibly allege that R.I. Housing failed to “adequately respond” to the QWR that plaintiffs submitted under 12 U.S.C. § 2605. In its decision, the court noted that an “adequate response” to a QWR can consist of either 1) a correction of an alleged error or 2) a reasonable investigation. In this instance, the court found that R.I. Housing had conducted a reasonable investigation after it had received plaintiffs’ QWR and reasoned that “RESPA requires that servicers provide borrowers with information, not that they necessarily accept a borrower’s assertion of error and correct it.” As to plaintiffs’ claim that R.I. Housing had exhibited a “pattern of noncompliance” with RESPA’s requirements of transparency and accountability, the court reasoned that the statute requires “much more” than the plaintiffs’ two alleged instances of noncompliance.
Finally, the court held that plaintiffs’ claim that R.I. Housing had “failed to correct errors promptly” was grounded in a misunderstanding of the law. The court reiterated that RESPA requires servicers to provide borrowers with relevant information about their mortgage accounts and their inquiries. However, the court found that R.I. Housing is not liable under RESPA for failing to correct an error it does not accept as true after a reasonable investigation into the error.
Takeaway
Pro se plaintiffs often misinterpret and misunderstand statutes, particularly those related to consumer finance. Even with the most liberal reading afforded to a pro se plaintiff’s complaint—noted by the court in this case—many claims brought forth by pro se litigants will often fail because the plausibility threshold required to survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6) is not met. Financial institutions should take note of this when evaluating any complaints filed against them by pro se plaintiffs.
McGlinchey Summer Associate Susanna E. Maheras assisted with the writing of this article.
