No Vicariously Liability for RESPA Violations
Close
 

No Vicariously Liability for RESPA Violations

An assignee of a home equity loan filed a judicial foreclosure against a homeowner claiming the homeowner failed to make payments on a home equity loan. The homeowner counterclaimed and brought a third party complaint against the original lender and its loan servicer seeking to impose vicarious liability for the failure of the loan servicer to comply with the Real Estate Settlement Procedures Act (RESPA). In affirming dismissal in favor of the bank, the Fifth Circuit held the homeowner failed to plead an agency relationship between the bank and servicer so the borrower failed to state a claim against the bank that it was vicariously liable for the servicer's alleged RESPA violations. Considering a novel issue of first impression, the court also held that as a matter of law the bank could not be held vicariously liable for the alleged RESPA violations of its servicers.

Christiana Trust v Riddle