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Eleventh Circuit Court of Appeals Sides with Wells Fargo Regarding a Borrower’s Truth in Lending Act Claim Related to a Mortgage Transfer
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Eleventh Circuit Court of Appeals Sides with Wells Fargo Regarding a Borrower’s Truth in Lending Act Claim Related to a Mortgage Transfer

Giles v. Wells Fargo Bank, N.A. 

In a recent unpublished opinion, the Eleventh Circuit upheld the district court’s ruling that Wells Fargo was not obligated to provide notice of transfer because Wells Fargo fell within the administrative exception to the TILA notice provisions. The court dismissed the action.

The case arose from the transfer of a mortgage to Wells Fargo by Fannie Mae. In 2007, LaKeesha G. Giles executed a promissory note in favor of America South Mortgage Corporation. The note was secured by a mortgage naming Mortgage Electronic Registration Systems, Inc. (MERS) as the mortgagee.

In late 2007, Fannie Mae purchased the note and subsequently transferred servicing duties to Wells Fargo. Wells Fargo held the original executed note as custodian on behalf of Fannie Mae.

In June 2010, Wells Fargo sent Giles a “Notice of Acceleration of Promissory Note and Mortgage” notifying Giles that she was in default, and that Wells Fargo planned to commence foreclosure proceedings.

In July 2010, MERS executed an Assignment of Mortgage transferring its interest in the note and mortgage to Wells Fargo. Wells Fargo did not provide a “Notice of New Creditor” to Giles following the Assignment.

In October 2010, Wells Fargo sold the property at a foreclosure sale.

Thereafter, Giles filed an action in District Court alleging Wells Fargo failed to abide by the notice requirement in section 1641(g) of the Truth in Lending Act (TILA).

The District Court found in favor of Wells Fargo. The Eleventh Circuit agreed, finding that Wells Fargo was not subject to the TILA notice requirement because the Assignment was made solely for Wells Fargo’s administrative convenience.

Section 1641(f) of TILA provides that a servicer shall not be treated as the owner of the obligation (and, therefore, is not subject to the notice requirements) if the servicer was assigned the obligation solely for administrative convenience.

Under Fannie Mae’s guidelines, the assignment to Wells Fargo was temporary and made solely for the purpose of completing the foreclosure action under applicable state law and to carry out Wells Fargo’s duties as a servicer to Fannie Mae.

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