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Florentino Montano v. Wells Fargo Bank, N.A. as Trustee

By Shaun Ramey • Wednesday, November 21, 2012

Florentino and Olga Montano sued Wells Fargo Bank, N.A. as Trustee of a securitization trust, in the United States District Court for the Southern District of Florida, with respect to their residence in Palm Beach County, Florida.  The borrowers alleged that Carrington, as servicer of their loan, failed to provide the name of the owner of the loan or master servicer pursuant to Section 1641(f)(2) of the Truth‐in‐Lending Act (TILA) after receiving a written request to do so.

In its motion to dismiss, Wells first argued that the duty to provide the notice applies only to servicer‐assignees.   Wells' reference to “servicer‐assignee” is derived from Section 1641(f)(1) which provides that a servicer shall not be treated as an “assignee” for purposes of this section unless the servicer is or was the owner of the obligation. Section 1641(f)(2) adds that a servicer shall not be treated as the owner of the loan for purposes of this section if the purpose of the mortgage assignment to the servicer was solely for the administrative convenience of servicing the loan; hence the term “servicer‐assignee.”  The court disagreed with Wells concluding that Congress would not have included in the 2009 amendment to TILA a specific reference to a private right of action against creditors if this section was only to apply to servicer‐assignees. (The amendment to TILA adding a private right of action against creditors/lenders was part of President Obama's 2009 Helping Families Save Their Homes Act.)

Next, the court addressed Wells' position that it could not be vicariously liable under TILA for a servicer's failure to comply with this disclosure provision.  In quoting a 2010 California decision, the court found that the owner of the loan could be liable for the action of a servicer. The court reasoned that to hold otherwise would leave borrowers without a remedy since servicers cannot be liable for damages under Section 1641(f) (2).

Carrington did provide a response to the borrowers, and in its last attempt at dismissal, Wells argued that Carrington's letter complied with Section 1641(f) (2). Carrington's letter merely stated that Carrington was the servicer and attorney‐in‐fact for Wells Fargo but failed to track the language in Section 1641(f) (2) by not specifically identifying the owner or master servicer. In short, the court refused to dismiss the borrowers' complaint on the grounds that Wells Fargo could be held vicariously liable for Carrington's failure to fully comply with the disclosure provisions set forth at Section 1641(f)(2).


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