§1641 Liability of Assignees

Summary

Buyers or new owners of loans can usually only be sued for mistakes by the original lender if the mistake is obvious from the loan papers. If the loan was assigned to them against their will, that rule does not apply. If a borrower signs a written receipt showing they got a required statement, that receipt is proof the statement was given and, unless the buyer knew otherwise, proof the rules were followed (except as section 1635(c) says). A borrower who has the right to cancel a loan under section 1635 can still cancel it against a buyer. For home loans (loans secured by real property), a buyer can be sued only if the problem is clear on the face of the disclosures and the transfer was voluntary. If a buyer purchases a certain special kind of mortgage, the buyer is subject to the same claims and defenses the borrower had against the original lender unless the buyer proves it is more likely than not that a reasonable person could not tell from the required documents that the mortgage was that special kind. Money awards are limited: for violations under this part they cannot exceed the amount set in section 1640; for other claims the most recoverable is the remaining debt plus everything the borrower paid, and that amount is reduced by any award under section 1640. Sellers of those mortgages must give a prominent notice of this possible liability as the Bureau decides. A servicer (company that handles payments) is not the loan owner unless it actually owns the loan. If the servicer got the loan only to make servicing easier, it is not treated as the owner. On request, the servicer must tell the borrower the owner’s contact information. These servicer rules apply to loans from or after September 30, 1995. The new owner of a mortgage must notify the borrower in writing within 30 days of the transfer with contact and transfer details.