TILA Multiple Violations

I have a question about the TILA act.

We have a second mortgage with a private lender that we just found out has 5 TILA violations. I was told that each violation is $2,000 each.

My question is: Do the violations count towards each owner? If there are four owners, does that mean each owner owes $10,000 plus the servicer?

Jen

———

Hi Jen,

You were not informed correctly; the TILA provides for a single statutory recovery even for multiple disclosure violations.  Specifically, section 1640(g) reads: 

“The multiple failure to disclose to any person any information required under this part or part D or E of this subchapter to be disclosed in connection with a single account under an open end consumer credit plan, other single consumer credit sale, consumer loan, consumer lease, or other extension of consumer credit, shall entitle the person to a single recovery under this section but continued failure to disclose after a recovery has been granted shall give rise to rights to additional recoveries. This subsection does not bar any remedy permitted by section 1635 of this title.”

Additionally, the National Consumer Law Center’s “Truth in Lending” (6th Edition, Page 564) explains the relationship between multiple borrowers and damages:

“The statute provides for only one recovery of the statutory penalty in transactions involving multiple obligors.  Class action recoveries, actual damages, and the HOEPA enhanced damages available under section 1640(a)(4) are not subject to that limitation.”

Not to confuse the matter, but there can be multiple statutory damages for other non-disclosure TILA violations such as the lender’s refusal to rescind a loan upon receipt of a valid rescission notice, prohibited practices under HOEPA, etc.

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.