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How To Proceed When A Demand Is Received

The Massachusetts Consumer Protection Act (Gen. Law Ch. 93A) affords consumers – including residential borrowers – a private right of action to seek injunctive relief and damages caused by unfair or deceptive acts and practices. A lender or servicer liable under Chapter 93A is exposed to actual damages caused by the unfair or deceptive act or practice, mandatory double or treble damages if a court finds the act or practice was knowing or willful, and mandatory recovery of attorneys’ fees and costs regardless of the amount of damages actually caused (even if the act or practice was not knowing or willful).

Most times, a residential borrower must send a 30-day demand letter to the lender/servicer before filing a lawsuit that contains a Chapter 93A claim. The demand letter must identify the claimant and reasonably describe the unfair or deceptive act or practice and the injury suffered, as well as demand relief. A recipient of a demand letter has the opportunity to respond within 30 calendar days of the mailing or delivery of the letter. The demand letter, and the 30-day response period, is a jurisdictional prerequisite to filing suit in most cases involving residential borrowers and other consumers. The goal of this demand-response process is to educate the parties and foster a reasoned settlement if at all possible.

The Importance Of A Thorough Investigation

A lender/servicer receiving a Chapter 93A demand letter has an affirmative duty to investigate the facts and consider legal precedent to determine whether or not to make a written tender of settlement in response to the demand letter. A thorough investigation and reasoned response cannot be overstated. That is because, beyond potentially being the impetus for a pre-litigation settlement, Chapter 93A ties an improper response to additional liability and a proper response to potentially significant limitations of liability.

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