§1641 — Title 15 Commerce and Trade | U.S. Code

Summary

Makes a person who buys or is given a consumer loan responsible for legal violations only in certain cases. A new owner is liable if the problem is obvious from the loan papers, unless the assignment was forced on them. If a later buyer did not know of any problems and the borrower signed a written receipt of required disclosures, that signature usually proves the papers were given and the rules were followed. A borrower who has the right to cancel a loan under section 1635 can cancel it against any new owner. If someone buys a mortgage covered by section 1602(aa), they must face the same claims and defenses the borrower could use against the original lender unless the buyer proves it was impossible for a reasonable person to tell from the required documents. Remedies are capped: for violations of this subchapter, damages are limited to the amount in section 1640; for other claims the most the borrower can get is the remaining debt plus all money the borrower paid, reduced by any 1640 award. Sellers must include a clear notice about this possible liability as the Bureau requires. Companies that only service loans are not treated as owners unless they actually own the loan, and must give the borrower owner contact info on request. For mortgage loans, the new owner must send the borrower a written notice within 30 days with the new owner’s contact details, transfer date, where the transfer is recorded, and other relevant information. This servicer rule applies to loans in existence or made on or after September 30, 1995.

Title 15, §1641

Commerce and Trade — Source: USLM XML via OLRC

(a)Except as otherwise specifically provided in this subchapter, any civil action for a violation of this subchapter or proceeding under section 1607 of this title which may be brought against a creditor may be maintained against any assignee of such creditor only if the violation for which such action or proceeding is brought is apparent on the face of the disclosure statement, except where the assignment was involuntary. For the purpose of this section, a violation apparent on the face of the disclosure statement includes, but is not limited to (1) a disclosure which can be determined to be incomplete or inaccurate from the face of the disclosure statement or other documents assigned, or (2) a disclosure which does not use the terms required to be used by this subchapter.

(b)Except as provided in section 1635(c) of this title, in any action or proceeding by or against any subsequent assignee of the original creditor without knowledge to the contrary by the assignee when he acquires the obligation, written acknowledgement of receipt by a person to whom a statement is required to be given pursuant to this subchapter shall be conclusive proof of the delivery thereof and, except as provided in subsection (a), of compliance with this part. This section does not affect the rights of the obligor in any action against the original creditor.

(c)Any consumer who has the right to rescind a transaction under section 1635 of this title may rescind the transaction as against any assignee of the obligation.

(d)(1)Any person who purchases or is otherwise assigned a mortgage referred to in section 1602(aa) 11 See References in Text note below. of this title shall be subject to all claims and defenses with respect to that mortgage that the consumer could assert against the creditor of the mortgage, unless the purchaser or assignee demonstrates, by a preponderance of the evidence, that a reasonable person exercising ordinary due diligence, could not determine, based on the documentation required by this subchapter, the itemization of the amount financed, and other disclosure of disbursements that the mortgage was a mortgage referred to in section 1602(aa) 1 of this title. The preceding sentence does not affect rights of a consumer under subsection (a), (b), or (c) of this section or any other provision of this subchapter.

(2)Notwithstanding any other provision of law, relief provided as a result of any action made permissible by paragraph (1) may not exceed—

(A)with respect to actions based upon a violation of this subchapter, the amount specified in section 1640 of this title; and

(B)with respect to all other causes of action, the sum of—

(i)the amount of all remaining indebtedness; and

(ii)the total amount paid by the consumer in connection with the transaction.

(3)The amount of damages that may be awarded under paragraph (2)(B) shall be reduced by the amount of any damages awarded under paragraph (2)(A).

(4)Any person who sells or otherwise assigns a mortgage referred to in section 1602(aa) 1 of this title shall include a prominent notice of the potential liability under this subsection as determined by the Bureau.

(e)(1)Except as otherwise specifically provided in this subchapter, any civil action against a creditor for a violation of this subchapter, and any proceeding under section 1607 of this title against a creditor, with respect to a consumer credit transaction secured by real property may be maintained against any assignee of such creditor only if—

(A)the violation for which such action or proceeding is brought is apparent on the face of the disclosure statement provided in connection with such transaction pursuant to this subchapter; and

(B)the assignment to the assignee was voluntary.

(2)For the purpose of this section, a violation is apparent on the face of the disclosure statement if—

(A)the disclosure can be determined to be incomplete or inaccurate by a comparison among the disclosure statement, any itemization of the amount financed, the note, or any other disclosure of disbursement; or

(B)the disclosure statement does not use the terms or format required to be used by this subchapter.

(f)(1)A servicer of a consumer obligation arising from a consumer credit transaction shall not be treated as an assignee of such obligation for purposes of this section unless the servicer is or was the owner of the obligation.

(2)A servicer of a consumer obligation arising from a consumer credit transaction shall not be treated as the owner of the obligation for purposes of this section on the basis of an assignment of the obligation from the creditor or another assignee to the servicer solely for the administrative convenience of the servicer in servicing the obligation. Upon written request by the obligor, the servicer shall provide the obligor, to the best knowledge of the servicer, with the name, address, and telephone number of the owner of the obligation or the master servicer of the obligation.

(3)For purposes of this subsection, the term “servicer” has the same meaning as in section 2605(i)(2) of title 12.

(4)This subsection shall apply to all consumer credit transactions in existence or consummated on or after September 30, 1995.

(g)(1)In addition to other disclosures required by this subchapter, not later than 30 days after the date on which a mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt shall notify the borrower in writing of such transfer, including—

(A)the identity, address, telephone number of the new creditor;

(B)the date of transfer;

(C)how to reach an agent or party having authority to act on behalf of the new creditor;

(D)the location of the place where transfer of ownership of the debt is recorded; and

(E)any other relevant information regarding the new creditor.

(2)As used in this subsection, the term “mortgage loan” means any consumer credit transaction that is secured by the principal dwelling of a consumer.

Notes & Related Subsidiaries

Editorial Notes

References in Text

section 1602(aa) of this title, referred to in subsec. (d)(1), (4), was redesignated section 1602(bb) of this title by Pub. L. 111–203, title X, § 1100A(1)(A), July 21, 2010, 124 Stat. 2107.

Amendments

2010—Subsec. (d)(4). Pub. L. 111–203 substituted “Bureau” for “Board”. 2009—Subsec. (g). Pub. L. 111–22 added subsec. (g). 1995—Subsec. (e). Pub. L. 104–29, § 7(a), added subsec. (e). Subsec. (f). Pub. L. 104–29, § 7(b), added subsec. (f). 1994—Subsec. (d). Pub. L. 103–325 added subsec. (d). 1980—Pub. L. 96–221 added subsecs. (a) and (c), designated existing provisions as subsec. (b), substituted “excepted as provided in subsection (a)” for “unless the violation is apparent on the face of the statement”, and struck out exception for actions under section 1640(d) of this title.

Statutory Notes and Related Subsidiaries

Effective Date

of 2010 AmendmentAmendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees.

Effective Date

of 1980 AmendmentAmendment by Pub. L. 96–221 effective on expiration of two years and six months after Mar. 31, 1980, with all

Regulations

, forms, and clauses required to be prescribed to be promulgated at least one year prior to such

Effective Date

, and allowing any creditor to comply with any

Amendments

, in accordance with the

Regulations

, forms, and clauses prescribed by the Board prior to such

Effective Date

, see section 625 of Pub. L. 96–221, set out as a note under section 1602 of this title.

§1641 Liability of Assignees

Summary

Title 15, §1641

Notes & Related Subsidiaries

Editorial Notes

References in Text

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Regulations

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Amendments

Regulations

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Citations & Metadata