Eleventh Circuit Holds That Assignee Did Not Violate TILA for Servicer’s Failure to Respond to Payoff Request

The United States Court of Appeals for the Eleventh Circuit recently affirmed a lower court and found that a consumer could not maintain a lawsuit against his mortgagee’s assignee for the mortgage servicer’s failure to respond to a request for a payoff balance under the Truth in Lending Act (“TILA”).   See Evanto v. Fed. Nat. Mortgage Ass’n, 2016 WL 788120 (11th Cir. Mar. 1, 2016).  In the case, a consumer requested that his servicer provide a payoff balance on the consumer’s loan.  When the servicer allegedly failed to do so within seven business days, the consumer sued the creditor’s assignee for an alleged TILA violation, arguing that the assignee controlled the servicer and therefore was liable for the violation.  See 15 USC 1639g (“[a] creditor or servicer of a home loan shall send an accurate payoff balance within a reasonable time, but in no case more than 7 business days, after the receipt of a written request for such balance from or on behalf of the borrower”).  The assignee moved to dismiss, arguing, among other defenses, that an assignee may only be liable for TILA violations if: (i) the alleged violation was “apparent on the face of the disclosure statement” and (ii) the assignment was voluntary.  The assignee argued that any violation regarding a payoff statement was post-closing and thus unrelated to the disclosure statement, and that it therefore could not be held liable as an assignee.  The District Court agreed and dismissed the action.  On appeal, the Eleventh Circuit affirmed the dismissal in “a matter of first impression for any circuit” and found that the term “disclosure statement” refers “to a document provided at or before closing.”  Because the payoff request occurred after the closing, the assignee was not liable under TILA.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com.