New owners or assignees of certain mortgage loans must send written notice of the transfer to borrowers under a provision in the Helping Families Save Their Homes Act of 2009, signed by President Obama on May 20, 2009. The requirement appears to be effective immediately.

The provision is an amendment to the Truth in Lending Act and carries TILA civil liability for violations, including statutory penalties up to $2,000 per violation or up to $500,000 in a class action.

The new requirement applies to mortgage loans secured by the borrower’s principal residence and mandates that the notice be sent within 30 days of the transfer date. The notice must include the transferee’s identity, address, and telephone number; the transfer date; contact information for a party, such as a servicer, who has authority to act on behalf of the transferee; and the location where the transfer is recorded. Until this amendment, TILA only obligated a servicer to identify the mortgage-loan owner upon the borrower's written request. This change is likely to give rise to numerous questions, including how the new requirement applies in the context of securitizations and whether it can be combined with the transfer of servicing notice required by the Real Estate Settlement Procedures Act.

Ballard Spahr's Consumer Financial Services Group is nationally recognized for its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs); its guidance in structuring and documentation of new consumer financial services products; and its experience with the full range of federal and state consumer credit laws throughout the country.

For further information, please contact:

 Alan S. Kaplinsky           215.864.8544    kaplinsky@ballardspahr.com

 Jeremy T. Rosenblum     215.864.8505    rosenblum@ballardspahr.com

 John L. Culhane, Jr.        215.864.8535    culhane@ballardspahr.com

 Barbara Mishkin             215.864.8528    mishkinb@ballardspahr.com


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