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Fall 2004-09 Assignee deemed a TiLA creditor

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Number 57
Fall 2004

Assignee deemed a TiLA "creditor"

In Egipciaco v. R & G Financial Corporation, 313 F. Supp. 2d 48 (D.P.R. 2004), the federal court in Puerto Rico found that an assignee of a mortgage loan is considered to be a "creditor," as the term is employed in the Truth in Lending Act.

Mortgage loan

Manuel Egipciaco and Betzaida Porrata obtained a mortgage loan from Continental Mortgage Corp. Continental sold the loan to R & G Financial Corporation. Two years and eleven months later, Egipciaco and Porrata informed R & G that they wanted to rescind the loan and mortgage pursuant to the Truth in Lending Act. R & G failed to act upon the notice of rescission, and the borrowers sued for statutory and actual damages, attorney's fees and costs.

"Creditor"

R & G moved for the dismissal of the suit, claiming that as assignee the bank did not meet the TiLA definition that a "creditor" is "a person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness . . ."

As stated, R & G was not the initial lender, but a subsequent assignee of the loan.

The District Court disagreed, quoting from Fairbanks Corp. v. Jenkins, 225 F. Supp. 2d 910 (N.D. Ill. 2002): "'despite the use of the word "creditor" in § 1640(a)'s introductory language, it is clear from § 1640 taken as a whole that Congress intended § 1640's remedies to apply to any creditor or assignee that violates TiLA's provisions.'"

Although the court dismissed the action for damages because it was time-barred, it allowed the recovery of attorney's fees and costs in the action for rescission.

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