United States Supreme Court Strays from the Pack with a Crucial Ruling for Borrowers
The Truth in Lending Act (TILA) gives home loan borrowers a three-day right to rescind, or cancel, a loan transaction. For these first three days, this right is unconditional, without any caveats. After the three days run out, there is a catch; the borrower has the right to rescind only if the lender has failed to satisfy TILA’s disclosure requirements. Even if the required disclosures are never made, the right of rescission will expire after three years; thus, straying from the pack.
In a unanimous, consumer-friendly decision on January 13, 2015, the United States Supreme Court clarified what it takes to exercise this right and made it easier for borrowers to assert it, straying from the pack in doing so. You can find a copy of the opinion here.
What the Supreme Court Did
In 2007, the Jesinoskis borrowed money from Countrywide Home Loans in a refinancing. Exactly three years later, they mailed Countrywide a letter seeking to rescind the loan. Their rescission was disregarded by Countrywide’s successor, Bank of America.
Four years after the refinancing, they filed a federal lawsuit asserting their right to rescission. Both the federal trial court and the federal appellate court sided with the bank and dismissed the lawsuit because the Jesinoskis did not sue within three years of the loan transaction, even though the TILA law unequivocally states a borrower “shall have the right to rescind . . . by notifying the creditor . . . of his intention to do so.” The Supreme Court brought the lawsuit back to life. Looking at the same TILA law, the Supreme Court found it to mean exactly what it states: all a borrower needs to do to exercise the right to rescind in the three year period is to provide written notice of rescission, which is exactly what the Jesinoskis did. The TILA law does not require the borrower to file a lawsuit within the three-year period, the Court ruled.
First, the Court’s ruling does not merely apply to the Jesinoskis. The Supreme Court has ruled that any borrower—including YOU—need only provide written notice to the lender in order to exercise the right to rescind.
Second, the Supreme Court UNANIMOUSLY ruled in favor of the borrowers despite the fact that the two courts below ruled against them. The Supreme Court strayed from the pack and made a consumer-friendly decision.
Third, the decision saves borrowers a ton of money, paper and time, as it replaces the lawsuit requirement with the written notice requirement, which is a lot less expensive and time-consuming.
Fourth, even if you file a lawsuit seeking to rescind under the TILA law years after the loan transaction, the court will not be able to dismiss your case for untimely exercise of the right to rescind provided you gave written notice within the three years after the transaction.
Fifth, if you gave written notice, and the lender has refused to honor it, do not be shy about suing the lender in federal court to obtain the rescission and whatever other damages you may have incurred at the hands of the lender. The TILA law allows recovery of court costs and a reasonable attorney’s fee award in an action in which a person is determined to have a right of rescission.
Right of Rescission
This is where we come in. At Oppenheim Law, we are available to evaluate your options, whether you are just considering rescinding a loan transaction or are looking to taking the bank to court. Contact us today.
About the author:
Roy Oppenheim, Sr. partner at Oppenheim Law, founder of The South Florida Law Blog sets the record straight in real estate, foreclosure and homeowner related matters. For over 25 years, the Firm has successfully defended and protected clients in South Florida representing them as their advocates. They have closed over $1.5 billion in real estate transactions ranging from representing investors in buying and selling commercial property, homeowners buying and selling, refinancing or modifying their loans. The firm also has developed a national reputation defending homeowners in foreclosure and deficiency judgments. The firm also engages in the highest quality of sophisticated commercial litigation and serving as general counsel to real estate developers and closely held companies, coordinating all legal related matters. Watch and see Roy Oppenheim discuss how he built South Florida’s premier law firm. Subscribe to the award winning South Florida Law Blog to stay connected to the latest in real estate law by Roy Oppenheim. (954) 384-6114 Oppenheim Law. – See more at: /end-of-the-year-homeowner-defense-legal-news-oppenheim-law/#more-10472