The assignee of a residential mortgage loan is not liable under the Truth In Lending Act (TILA) for a loan servicer's failure to timely provide a payoff demand, the 11th Circuit recently held.

TILA requires that a mortgage lender or servicer send ''an accurate payoff balance within a reasonable time, but in no case more than seven business days'' after receiving the borrower's request. 15 U.S.C. § 1639g. A creditor who fails to comply is liable for the remedies listed in § 1640(a), including actual and statutory damages, and attorney's fees and costs.

In Evanto v. Fed. Nat’l Mortg. Ass’n, the plaintiff alleged that he requested a payoff statement from his loan servicer, but the servicer failed to provide it. He sued the assignee owner of his loan, and the assignee successfully moved to dismiss the complaint. The 11th Circuit affirmed the dismissal, holding that the assignee owner had no liability for the servicer’s failure to provide the statement.

In a case of first impression, the Court noted that 15 U.S.C. § 1641(e) of TILA creates a cause of action against a voluntary assignee only for a violation of the act that is ''apparent on the face of the disclosure statement.'' Because the disclosure statement is provided prior to the loan being made, and because a payoff statement cannot be requested until after the loan is made, the Court reasoned that a failure to provide a payoff statement could not possibly be apparent on the face of the disclosure statement. Therefore, the assignee could not be held liable.

The case is an important victory for lenders because a contrary result could have opened the door to potential plaintiffs serving strategic payoff demands following the assignment of a loan to generate potential claims under TILA.