Runkle v. Federal National Mortgage Ass'n
905 F. Supp. 2d 1326
S.D. Fla.2012Background
- Runkle sued Fannie Mae and its servicer Seterus for TILA violations and a payoff statement dispute.
- Seterus serviced Runkle’s loan for Fannie Mae after assignment of the loan.
- Runkle sent a written request (Aug 2011) to identify the owner/master servicer of his loan; Seterus replied identifying itself as servicer and Fannie Mae as owner, but did not provide a master servicer address despite the statute.
- Runkle alleged Seterus violated TILA § 1641(f)(2) by failing to provide owner/master servicer contact information and sought a payoff statement under Regulation Z § 226.36(c)(1)(iii).
- Fannie Mae moved to dismiss, arguing it is only an assignee and that Seterus’s disclosures were sufficient; the court granted in part and denied in part, dismissing Count I with prejudice but allowing Count II to proceed.
- The court held assignees may be liable for servicer violations (citing Khan) and allowed a private action for Regulation Z violation for failure to provide a payoff amount, while finding no § 1641(f)(2) violation where Seterus adequately disclosed its role as master servicer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Liability of assignee for servicer violations | Runkle argues Fannie Mae can be liable as assignee for servicer’s §1641(f)(2) violations. | Fannie Mae contends assignees are not liable for servicer violations. | Assignees can be liable for servicer violations. |
| Whether Seterus violated §1641(f)(2) by failing to identify the master servicer | Runkle asserts Seterus failed to identify owner/master servicer as required. | Fannie Mae argues no magic language required; disclosure adequate. | Seterus did not violate §1641(f)(2); disclosure sufficed to show master servicer relationship. |
| Private right of action for Regulation Z payoff statement violation | Runkle claims Seterus’s failure to provide an accurate payoff statement violated Regulation Z and §1639(i)(2). | Fannie Mae contests standing and interpretation of Regulation Z requirements. | Runkle may sue for violation of Regulation Z §226.36(c)(1)(iii). |
| Scope of vicarious liability for Regulation Z violations by assignees | Runkle contends Fannie Mae can be liable for Seterus’s Regulation Z violation as assignee. | Fannie Mae argues it is merely an assignee with no liability for such post-assignment conduct. | Assignees can be vicariously liable for Regulation Z violations. |
| Impact of §1641(a) apparent-on-face limitation on assignee liability | Argues assignees can be liable for post-assignment disclosures not being on the face of an origination disclosure. | Argues liability limited to disclosures created at origination. | assignees can be liable for post-assignment nondisclosures under TILA. |
Key Cases Cited
- Khan v. Bank of New York Mellon, 849 F. Supp. 2d 1377 (S.D. Fla. 2012) (creditor liable for servicer’s §1641(f)(2) violations; supports assignee liability)
- Kievman v. Fed. National Mortg. Ass’n, 901 F. Supp. 2d 1348 (S.D. Fla. 2012) (disagrees with Khan on private right action; discusses liability scope)
- In re Meyer, 379 B.R. 529 (Bankr. E.D. Pa. 2007) (servicer status and disclosure issues in TILA context)