13 January 2015

Law in Plain English: Jesinoski v. Countrywide Home Loans, Inc.

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

SCOTUSblogJesinoski v. Countrywide Home Loans, Inc.

Argument: Nov 4 2014 (Aud.)

Background: Three years to the day after consummating a $611,000 home loan, mortgagors Larry and Cheryle Jesinoski mailed a notice to the lenders seeking to rescind the loan due to alleged violations of the Truth in Lending Act (TILA), which requires that a borrower must notify the creditor in writing within three years of the consummation of the transaction. The lenders denied the request to rescind. A year later (now four years after consummating the loan), the Jesinoskis sued the lenders to rescind the loan. The district court ruled for the lenders. The Eighth Circuit affirmed, holding that to notify the creditor, a party seeking to rescind a loan transaction must file suit within three years of consummating the loan.

Issue: The question before the Court is whether a borrower exercises his right to rescind a transaction in satisfaction of the requirements of the Truth in Lending Act, 15 U.S.C. § 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 instead file a lawsuit within three years of the consummation of the transaction, as the First, Sixth, Eighth, Ninth, and Tenth Circuits have held.

Holding: In a unanimous decision, the Supreme Court ruled that a borrower exercising his right to rescind under the Act need only provide written notice to his lender within the 3-year period, not file
suit within that period. Section 1635(a)’s unequivocal terms—a borrower “shall have the right to rescind . . .by notifying the creditor. . .of his intention to do so” (emphasis added)—leave no doubt that rescission is effected when the borrower notifies the creditor of his intention to rescind.
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