## Facts

- Borrowers brought a putative class action challenging “high cost, high interest” second-mortgage loans secured by their homes.
- Plaintiffs alleged the originator, Mortgage Capital Resource Corporation (MCR), steered consumers with substantial home equity into high-fee/high-interest loans.
- Plaintiffs alleged the loans were “high-cost mortgages” covered by HOEPA and that MCR failed to provide the disclosures required by TILA/HOEPA for such loans.
- Plaintiffs alleged Residential Funding Corporation (RFC) and Chase Manhattan Bank (as indenture trustee) purchased or otherwise acquired many MCR-originated loans in the secondary market.
- Plaintiffs sought to hold RFC and Chase liable as assignees under TILA as amended by HOEPA, relying on 15 U.S.C. § 1641(d)(1).
- Defendants moved to dismiss the second amended complaint under Rule 12(b)(6).

## Issues

1. Whether the complaint adequately alleged that the challenged loans qualified as HOEPA “high-cost” mortgages triggering heightened TILA/HOEPA disclosure duties.
2. Whether 15 U.S.C. § 1641(d)(1) permits borrowers to assert TILA/HOEPA claims against assignees of HOEPA loans for the originator’s violations, and what limits apply.
3. Whether state-law claims against assignees were sufficiently pleaded and cognizable, or instead were impermissibly broader than the assignee liability recognized by the federal scheme.
4. Whether, taking the pleaded facts as true, the second amended complaint stated claims upon which relief could be granted.

## Decision

- The court granted the motion to dismiss in part and denied it in part.
- The court held plaintiffs sufficiently pleaded that the loans were HOEPA-covered and that MCR failed to comply with required TILA/HOEPA disclosures, allowing core federal claims against MCR to proceed.
- The court allowed certain TILA/HOEPA assignee-liability claims against RFC and Chase to proceed under § 1641(d)(1), subject to statutory limits on the assignees’ exposure.
- The court dismissed or narrowed certain state-law and derivative theories against the assignees where liability was asserted beyond what the statute supports or where allegations (particularly fraud-type allegations) lacked defendant-specific factual detail.

## Legal Principles

- At the pleading stage, allegations that a mortgage meets HOEPA high-cost triggers and that required HOEPA/TILA disclosures were not provided can state a claim sufficient to survive Rule 12(b)(6).
- Under ordinary TILA rules, assignee liability is generally limited to disclosure violations apparent on the face of the assigned documents.
- For HOEPA high-cost mortgages, 15 U.S.C. § 1641(d)(1) expands assignee exposure by making assignees subject to “all claims and defenses with respect to the mortgage” that the consumer could assert against the creditor, within statutory constraints.
- State-law claims (especially fraud-based claims) must be pleaded with particularized, defendant-specific facts and are not automatically imposed on assignees merely because they acquired the loan.

## Conclusion

The court permitted the action to proceed on central TILA/HOEPA theories, including certain assignee-liability claims under § 1641(d)(1) against secondary-market purchasers of alleged HOEPA loans, while trimming state-law and other theories that were insufficiently pleaded or exceeded the liability allowed by the federal statutory framework.


Bryant v. Mortg. Cap. Res. Corp., 197 F. Supp. 2d 1357 (N.D. Ga. 2002)