Assignee can be liable for an originator’s RESPA violations

In a question that has vexed litigants and the courts for years a district court in New Jersey, in a thinly-reasoned opinion, held that assignee is liable for the assignor’s RESPA violations. In Carmen v. Metrocities Mortg. Corp., Civ. No. 08-2729 (D.N.J., May 18, 2009), the court found that an assignee can be held to account under RESPA due solely to its assignee status. Despite citing an inability to find any opinion in which a court decided the issue, it did discuss the only reported case which has in fact addressed it to date. In _In re Murray_, 239 B.R. 728, 736 (Bankr.E.D.Pa. 1999), the court held that RESPA liability does not extend to assignees because [t]he RESPA Regulations define a ‘lender’ as a secured creditor ‘named in the debt obligation and document creating the loan.’ (quoting 24 C.F.R. § 3500.2(b)) and ‘this definition would not include … a subsequent assignee. _In re Murray_, 239 B.R. at 736. The New Jersey District court was not persuaded by this simple, but compelling, reasoning. Instead it distinguished Murray on the grounds that it did not address whether an assignee could be held liable for a RESPA violation pursuant to the FTC Holder Rule. The court did not explain how the holder rule applies in these circumstances, however. It also felt that because RESPA, unlike TILA, does not have a specific provision limiting assignee liability Congress surely intended to extend liability to assignees.

Download Related Document