Borrowers Able To Rescind Loan 3 Years Later Under the Truth in Lending Act

Posted in Business & Corporate

The Truth in Lending Act was passed by Congress in order to help consumers “avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing.” The Act permits borrowers to rescind a loan three business days following the “consummation of the transaction or the delivery of the information and rescission forms” and disclosures required under the Act, whichever is later, by notifying the creditor of its intention to do so. The borrower’s right of rescission lasts for three years after the date of consummation of the transaction or upon the sale of the property. In a recent case, Jesinoski et. ux. v. Countrywide Home Loans, Inc., et. al., the Supreme Court of the United States was asked to determine whether a borrower properly exercises its right of rescission by providing notice to the lender (as required by the Act), or whether the borrower is also required to file suit before the three-year period ends. The Court found that the Act only requires the borrower to give the lender notice, and does not require that suit be filed, within the three-year rescission period.