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Q: Under the Truth in Lending Act ("TILA"), is there assignee liability to a mortgage loan purchaser?
A: Yes, but only if (1) the underlying violation is "apparent on the face of the disclosure statement provided in connection with the transaction," and (2) the assignment to the assignee was voluntary (15 USC § 1641).
A violation is "apparent on the face of the disclosure" if the disclosure can be determined to be incomplete or inaccurate when comparing the disclosure to any itemization of the amount financed, the note, or any other disclosure of disbursement. A violation will also be considered "apparent on its face" if the disclosure does not use the terms or format required under § 1641 of TILA.
Prior to the promulgation of the Know Before You Owe / TILA-RESPA Integrated Disclosure Rule ("KBYO/TRID"), violations of the Real Estate Settlement Procedures Act’s ("RESPA") disclosure and delivery elements were not generally subject to assignee liability. While KBYO/TRID combined the TILA and RESPA disclosures, Congress did not amend the liability provisions of TILA or RESPA in conjunction therewith. As such, it is unclear how courts and regulators will apply assignee liability to violations of KBYO/TRID. It will likely depend upon whether the CFPB relied upon TILA as authority for the section of the statute which is claimed to have been violated.
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