Supreme Court holds that TILA Rescission is accomplished with notice alone

Edgardo Veguilla-Gonzalez, Esq.

The United States Supreme Court decided on January 2015 that all a borrower needs to do to rescind a mortgage on their home is to send notice by mail to the lender within three years of having taken out the loan. The case is Jesinoski v. Countrywide Home Loans, Inc., No. 13-684, 574 U.S. ___, 135 S.Ct. 790, 190 L. Ed. 2d 650 (Jan. 13, 2015). The issue the Court addressed was whether, to effect a rescission of the mortgage loan, the borrower needed to sue the mortgage lender, or whether merely sending a notice by mail was sufficient.

Under the "Truth in Lending Act" (TILA), a borrower who does not receive certain legally required warnings from their mortgage lender during the mortgage closing process has the right to rescind the mortgage transaction within three (3) years after the loan was issued.

Before the Supreme Court's decision, there were conflicting precedents among the Circuit Courts regarding the steps a borrower had to take to obtain a rescission. Some circuits had ruled that the borrower needed to file a lawsuit. Other circuits had ruled that sending a notice by mail was sufficient. The Supreme Court agreed with this latter group, ruling that the language of the statute was unambiguous and that a notice sent by mail within three (3) years was sufficient.

This decision is a major victory for borrowers, who can now exercise their right to rescind without the additional burden and cost of filing a lawsuit.