Why RESPA Never Appears in a HUD Action Plan to Prevent Foreclosure

If you have sat down with a HUD-approved housing counselor, you know how the meeting runs. The counselor opens a budget worksheet, asks about your income and expenses, and walks you through the servicer’s loss mitigation options: forbearance, a repayment plan, a loan modification, a short sale. You leave with a list of documents to gather and a referral to the servicer’s hardship department.

The Real Estate Settlement Procedures Act does not come up. The counselor is doing the job the program defines, and that job was built around the homeowner’s finances and the servicer’s menu of options. Whether the servicer has followed federal law in handling the loan is a separate question, and the counseling framework has no place to ask it.

What the counseling framework covers

HUD’s housing counseling program runs under 24 CFR Part 214 and HUD Handbook 7610.1. The regulation defines the basic services every participating agency offers: counseling that enables a client to make informed and reasonable decisions toward a housing goal, and referrals to local, state and federal resources (24 CFR 214.300(b)). Except in reverse mortgage counseling, the counselor and the client must also establish an action plan (24 CFR 214.300(a)(2)). The plan records the client’s goal, the financial picture and the steps each side agreed to take, and the agency reports its activity and outcomes to HUD on form HUD-9902.

Nothing in that framework calls for a review of how the servicer has handled the loan. A counselor is not asked to check whether the servicer answered written requests on time, applied payments as the note directs, or can show who owns the loan. Those questions sit outside the intake, the action plan and the outcomes the agency reports.

What RESPA gives a homeowner

Section 6 of RESPA (12 U.S.C. § 2605) and its implementing rule, Regulation X, give a borrower written tools that work whether or not the loan is in default.

• A request for information. The servicer must acknowledge a written request within five business days and answer it within 30 business days. A request for the identity of the owner or assignee of the loan must be answered within 10 business days (12 CFR 1024.36(c) and (d)). The servicer has to provide the information or state in writing, after a reasonable search, that it is not available.
• A notice of error. The servicer must acknowledge the notice within five business days and, in most cases within 30 business days, either correct the error or explain in writing why it found none after a reasonable investigation (12 CFR 1024.35(d) and (e)).
• A designated address. A servicer may establish an address that borrowers must use for these letters (12 CFR 1024.35(c) and 1024.36(b)). A letter sent anywhere else may never start the deadline.

A servicer that fails to respond, or responds late or incompletely, has violated the rule unless one of its exceptions applies. A borrower can recover the actual damages the failure can be shown to have caused, up to $2,000 in additional damages where there is a pattern or practice of noncompliance, and costs and attorney’s fees in a successful action (12 U.S.C. § 2605(f)). The suit must be filed within three years of the violation (12 U.S.C. § 2614).

Sending a request or a notice of error does not pause collection or stop a foreclosure. What the servicer may not do for 60 days is report the disputed payment to a credit bureau as overdue (12 U.S.C. § 2605(e)(3) and 12 CFR 1024.35(i)). A foreclosure sale is restricted in narrower situations, chiefly when a complete loss mitigation application was submitted in time and is still under review (12 CFR 1024.41(f) and (g)).

Why it is left out

The omission follows from how the program is built. HUD recommends that agencies seek funding from sources that may include state and local governments, private foundations, and lending or real estate organizations, provided the arrangement stays within the program’s conflict of interest rules (24 CFR 214.311(b)). Agencies are assessed on the activity and outcomes they report on the HUD-9902, and HUD has used that data in scoring its housing counseling grant competitions.

An agency in that position has no mandate, no measure and no funding for an adversarial review of the servicer, so the session concentrates on what it was designed to do: identify the hardship, apply for the available option, submit the documents and follow up. That work is valuable to many homeowners. It also means a servicer can miss its deadlines several times on one loan and still approve a modification. The modification closes the counseling file, and the missed deadlines may never be written down.

What gets missed

What this costs the homeowner is time. The written tools above are available during the same months the homeowner spends in the loss mitigation process, and their value depends on using them early. Correspondence is easier to organize while it is recent, and the three-year period for a RESPA claim runs from each violation. A homeowner who works through counseling for six months and is then denied a modification starts from the beginning: no request for information has been sent, no deadline has started to run, and nothing the servicer did along the way is on the record.

What a more complete resource looks like

Serv Inc. works alongside a housing counselor. Loss mitigation help has real value, and HUD-approved agencies meet a real need. We supply the piece the counseling framework leaves out: a structured review of whether the servicer has met its obligations, and a process for putting the results in writing while it still matters.

When a member comes to us facing foreclosure, we read the file with a different set of questions. We look at whether written requests were answered on time and in full, whether the payment history supports the amount demanded, and what the records show about who holds the loan and who is enforcing it. That review runs alongside a modification application. A homeowner can pursue both, and what the review finds often shapes what the homeowner asks for next. Our mortgage page describes the examination in more detail.

What churches and community leaders can do

If your congregation or organization helps homeowners in distress, you influence which resources they receive. Referring someone to a HUD-approved counselor is sound, and it works best as one of two referrals. A homeowner who knows that the servicer has to answer a written request within a set number of days, and that a missed deadline has consequences, is in a stronger position than one who has only been told which forms to send. We work with housing counseling agencies and community partners to provide that second track.

This is the first article in a series on structural gaps in consumer mortgage protection. The second is The Dual Duty Problem in HUD Foreclosure Prevention.

An earlier version of this article appeared in The Corporate Critic, our LinkedIn newsletter, on May 27, 2026. This version has been revised and expanded. This article is general information and is not legal advice. To find out what your own records show, upload your documents for a free analysis.

Sources

• 24 CFR 214.300, Counseling services
• 24 CFR 214.311, Funding
• HUD Handbook 7610.1, Housing Counseling Program
• HUD, FY2023 Comprehensive Housing Counseling NOFO, frequently asked questions
• 12 U.S.C. § 2605, Servicing of mortgage loans
• 12 U.S.C. § 2614, Jurisdiction of courts; limitations
• 12 CFR 1024.35, Error resolution procedures
• 12 CFR 1024.36, Requests for information
• 12 CFR 1024.41, Loss mitigation procedures