(a) Notwithstanding any other provision of law, any person who purchases or is otherwise assigned a high-cost home loan shall be subject to all claims and defenses with respect to the high-cost home loan that the borrower could assert against the lender of the high-cost home loan, unless the purchaser or assignee demonstrates, by a preponderance of the evidence, that the purchaser or assignee exercised due diligence at the time of the purchase of the high-cost home loans, or within a reasonable time thereafter, intended to prevent the purchaser or assignee from purchasing or taking assignment of a high-cost home loan that violates this chapter.
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Terms Used In Tennessee Code 45-20-105

  • Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
  • Borrower: means a natural person obligated to pay a home loan, including a co-borrower. See Tennessee Code 45-20-102
  • Contract: A legal written agreement that becomes binding when signed.
  • Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
  • Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
  • High-cost home loan: means a home loan in which the terms of the loan meet or exceed the rate threshold or the total points and fees threshold. See Tennessee Code 45-20-102
  • Home loan: means a loan in which:
    (A) The principal amount of the loan does not exceed the lesser of the conforming loan size limit for a single-family dwelling as established by the federal national mortgage association, or three hundred fifty thousand dollars ($350,000). See Tennessee Code 45-20-102
  • Lender: means "lender" as defined in 24 C. See Tennessee Code 45-20-102
  • Person: means any individual, corporation, partnership, trust, or any other business unit or legal entity, as the context may require. See Tennessee Code 45-20-102
  • Year: means a calendar year, unless otherwise expressed. See Tennessee Code 1-3-105
(b) The relief granted in an action, pursuant to subsection (a):

(1) May be asserted by the borrower acting only in an individual capacity;
(2) May not exceed the sum of the amount required to reduce the borrower’s liability, so that it is no longer a high-cost home loan, plus the amount required to recover costs, including reasonable attorney’s fees;
(3) May be asserted by the borrower of a high-cost home loan after notice of acceleration or foreclosure of the high-cost home loan, asserting a violation of § 45-20-103 in an individual action to enjoin foreclosure, or to preserve or obtain possession of the home secured by the high-cost home loan; and
(4) Shall be brought within three (3) years from the date of the occurrence of the violation; provided, however, that a borrower shall not be barred from asserting a violation of § 45-20-103 in an action to collect the debt that was brought more than one (1) year from the date of the occurrence of the violation, as a matter of defense by recoupment or set-off in the action, except as otherwise provided by law.
(c) This section shall not apply if a purchaser or assignee has exercised due diligence by demonstrating that the purchaser or assignee:

(1) Has in place, at the time of the purchase or assignment of the loans, policies that expressly prohibit the purchase or acceptance of assignment, by the purchaser or assignee, of any high-cost home loan containing violations;
(2) Requires, by the applicable purchase contract, that a seller or assignor of the loans to the purchaser or assignee represents and warrants to the purchaser or assignee, as of the applicable sale date, that either:

(A) The seller or assignor will not sell or assign to the purchaser or assignee any high-cost home loan containing violations; or
(B) The seller or assignor is a beneficiary of a representation and warranty from a previous seller or assignor to that effect, and, as a result of its purchase of the loans, the purchaser or assignee is a beneficiary of the representation and warranty; and
(C) Exercises reasonable due diligence, at or before the time of the purchase or assignment of home loans, or within a reasonable period of time after the purchase or assignment of the home loans, that is intended by the purchaser or assignee to prevent the purchaser or assignee from purchasing or taking assignment of any high-cost home loan containing violations.
(d) The reasonable due diligence requirement referred to in subdivision (c)(2)(C) may be met by employing lender’s quality control sampling methodology and shall not require loan-by-loan review, for purposes of this subsection (d).
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