It is not common for decision at the United States Supreme Court to have direct application to common, everyday residential mortgage transactions. That soon might change.
Section 1635(f) of the Truth in Lending Act (TILA) provides that “An obligor’s right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first ... .” On Nov. 4, 2014, the Supreme Court will hear argument in the case of Jesinoski v Countrywide Home Loans.
In Jesinoski the Supreme Court will examine the question of whether a residential mortgage loan borrower timely exercises the right to rescind under §1635 by notifying the lender in writing within three years of the loan closing (as the Third, Fourth and Eleventh circuits have held), or whether the borrower must actually file a lawsuit to enforce the right to rescind within the three years permitted under TILA (as the First, Second, Sixth, Eighth, Ninth and Tenth circuit courts have concluded).
Put another way, and paraphrasing from Countrywide’s brief, the question presented is whether, when a borrower seeks to rescind his mortgage loan after TILA’s three-day unconditional rescission period expires and the lender disputes the right to rescind based on an alleged failure to provide the required disclosures when the loan closed, must the borrower sue for rescission before any right to rescind expires under §1635(f)?
The import of the Supreme Court’s decision is readily apparent. In a market where borrowers in default might reach for any rope to help forestall foreclosure imagine the potential chaos that could ensue if a borrower could unilaterally rescind a mortgage loan simply by stating an intention to do so – years after the closing.
While it seems that requiring the filing of a lawsuit is consistent with not only the language found in the statute, its purpose and the overall intent of statutes of repose, and utter confusion could reign if the minority view were to be adopted thereby allowing a borrower to indefinitely toll TILA’s statute of repose until the borrower got around to filing a lawsuit, there is plainly a split in the circuit courts, one that the Supreme Court has decided the time is right to resolve.
Matthew J. Boettcher is a partner in the firm’s Bloomfield Hills office and Co-leader of Plunkett Cooney’s Commercial Litigation Practice Group. He concentrates his practice in the area of commercial litigation with ...
Add a comment
- Commercial Liability
- Business Torts
- Business Risk Management
- Commercial Real Estate
- Commercial Leasing
- Real Estate
- Civil Litigation
- Regulatory Law
- Real Estate Mortgages
- Commercial Loans
- Mortgage Foreclosure
- Alternative Dispute Resolution (ADR)
- Shareholder Liability
- Damages Recovery
- Risk Management
- Fraud Activity
- Tax Law
- Cyber Attack
- Class Action
- Product Liability
- Biometric Data
- Banking Law
- Statute of Limitations
- Noncompete Agreements
- Internet Law
- Consumer Protection
- Residential Liability
- Zoning and Planning
- Department of Education (DOE)
- Fair Debt Collection Practices Act
- Fair Credit Reporting Act
- Unfair Competition
- Uniform Commercial Code (UCC)
- Wait, I Have to Pay my Own Attorney? But I Won the Case?
- Preliminary Injunctions in Michigan, the More They Change the More They Stay the Same
- President Biden Signs Cryptocurrency Executive Order Establishing Whole-of-Government Approach to Regulating Digital Assets Industry
- My 5 Lessons Learned from the COVID-19 Pandemic
- Am I at Fault for Breach of Contract if the Other Party Breached It First?
- Maximizing Damages Recovery in Michigan's District Courts Challenged by Jurisdiction Limits
- Proliferation of Security Cameras, Drones Doesn't Necessarily Reduce Reasonable Expectation of Privacy Under the Law
- Does Sympathy or Empathy Have a Place in the Courtroom?
- No Light Yet at End of COVID-19 Real Estate Tunnel
- When are Clear, Unambiguous Contracts Nonetheless Ambiguous?