This is a nice win for homeowners, because it is the final word on rescission. SCOTUS sided with the homeowners on this one, holding that borrowers exercising their right to rescind mortgages under the Truth in Lending Act (“TILA”) only need to provide written notice to creditors within three years of the loan being issued. They are NOT required to bring a lawsuit within that period.
Also, note that SCOTUS only addressed the when of the notice and not the how, because TILA doesn’t say anything about how notice is to be given.
You probably remember that TILA gives borrowers the right to rescind certain loans up to three years after the loans were issued when the borrowers do not receive the required disclosures. TILA provides that a borrower “shall have the right to rescind … by notifying the creditor … of his intention to do so.”
Homeowners rights were expanded under TILA in 1980, and since then, the courts have interpreted the Act differently. That meant that in some federal courts, homeowners were only required to give notice within the three years, and in others they were required to file a lawsuit.
And we all know how those lawsuits fared — most of them were losers for homeowners. How many homeowners raised TILA issues in lawsuits only to be shut down by courts?
Based on my work in foreclosure defense, it seems like much of the changes have happened too late, but perhaps we’ve all paved the way to preventing this from happening to others. And it seemed like 2014 was the turning point for more developed case law.
I’ve seen most of my clients get great outcomes in their cases. Ultimately, I am most happy about the case decisions we’ve seen, like this one and of course, Steinberger. If you fought in the courts and lost (as I did), take heart: each one of those losses has ultimately led to more protections for homeowners.