Monday, August 06, 2012

Gale v. First Franklin Loan Services (9th Cir. - July 12, 2012)

As you all probably know, real estate mortgages get issued by a particular bank, get "serviced" by different entities (e.g., the entities to whom you send your monthly payments), and then -- through MERS and other means -- get shuffled around through a plethora of different entities.

A federal statute, 15 U.S.C. sect. 1641(f)(2) expressly provides:  "Upon written request by the obligor, the servicer shall provide the obligor, to the best knowledge of the servicer, with the name, address, and telephone number of the owner of the obligation or the master servicer of the obligation."

You could see why this obligation might make sense.  You may well not know who owns your loan.  Your mortgage servicer does (since they have to give your monthly payments to them).  You should be allowed to ask 'em, and they should be required to tell you.  That way you can try to renegotiate your loan, arrange a short sale, or discuss other things about your mortgage.  Something that you can't do if you don't know who owns it.  So you can see why Section 1641(f)(2) might well mean exactly what it says.

But according to the Ninth Circuit, it actually doesn't mean that at all.

See if you could come up with a theory, based on the text of the statute quoted above, that this language means anything other than what it appears to say.  Then read the opinion and see if you think the Ninth Circuit has come up with the same theory and/or a more persuasive one.

Mind you, the Ninth Circuit says that, in 2010, the Dodd-Frank bill imposed in RESPA precisely the requirement that the plaintiff here alleged exists in TILA pursuant to Section 1641.  So, currently, you do indeed have the right to find out who owns your loan.

But not before 2010.  In TILA, the statute doesn't mean what you might think it means from just reading it.

See if you agree.