Jesinoski v. Countrywide Home Loans
Issues
May a borrower simply provide written notice to a creditor to exercise a statutory right to rescind a home-secured loan under the Truth In Lending Act, or must the borrower file a lawsuit to exercise that right?
This case presents the Supreme Court with an opportunity to determine the procedural requirements for exercising the right to rescission under the Truth In Lending Act (“TILA”). The Jesinoskis argue that if a creditor fails to strictly comply with TILA’s terms, then borrowers only need to provide written notice in order to rescind a loan any time within a three-year period. Meanwhile, Countrywide maintains that any rescission occurring after the first three days of the loan requires a lawsuit if the rescission is contested by the creditor. This case ultimately will determine who bears the cost of litigation in rescinding home-secured loans, and also determines the scope of TILA’s protection for borrowers.
Questions as Framed for the Court by the Parties
The Truth in Lending Act provides that a borrower “shall have the right to rescind the transaction until midnight of the third business day following . . . the delivery of the information and rescission forms required under this section ... by notifying the creditor ... of his intention to do so.” 15 U.S.C. § 1635(a). The Act further creates a “[t]ime limit for [the] exercise of [this] right,” providing that the borrower’s “right of rescission shall expire three years after the date of consummation of the transaction” even if the “disclosures required ... have not been delivered.” Id. § 1635(f).
The question presented is:
Does a borrower exercise his right to rescind a transaction in satisfaction of the requirements of Section 1635 by “notifying the creditor” in writing within three years of the consummation of the transaction, as the Third, Fourth, and Eleventh Circuits have held, or must a borrower file a lawsuit within three years of the consummation of the transaction, as the First, Sixth, Eighth, Ninth, and Tenth Circuits have held?
On February 23, 2007, Larry and Cheryle Jesinoski refinanced their home for a $611,000 loan from Countrywide Home Loans. See Jesinoski v. Countrywide Home Loans, Inc., No. 11-cv-0474-DWF-FLN, 2012 WL 1365751, at *1 (D. Minn. Apr. 19, 2012).
Written by
Edited by
The authors would like to thank Professor Cynthia Farina for her guidance.
Additional Resources
- Laurence Hurley: U.S. justices agree to hear homeowner case against bank, Reuters (Apr. 28, 2014).
- Brent Kendal: Supreme Court to Consider Case on Rescinding Mortgage Loans, The Wall Street Journal (Apr. 28, 2014).