A Lawsuit Is Not Required to Rescind a Home Loan Under TILA, Says U.S. Supreme Court

A new U.S. Supreme Court decision clarified that when you have a three-year right to rescind a home loan under the Truth in Lending Act, you can rescind by sending written notice to your lender.

A new U.S. Supreme Court decision clarified that when you have a three-year right to rescind a home loan under the Truth in Lending Act, you can rescind by sending written notice to your lender. You do not have to file a lawsuit within the three-year period in order to protect your rights. Jesinoski v. Countrywide Home Loans, Inc., 574 U.S. __ (2015).

Under the Truth in Lending Act, most homeowners have a three-day right to cancel a home loan. But under certain circumstances, TILA extends that right to three years. This right kicks in if the lender violated a significant provision of TILA. (To learn what might constitute a material violation of TILA, see Should You Fight Your Foreclosure in Court?)

In Jesinowski v. Countrywide Home Loans, the borrowers sent a written notice to their lender, rescinding their home loan, exactly three years after they signed the loan documents. One year later, they sued. The lender argued that the borrowers did not act within the TILA deadline because they should have sued within the three-year period. The district court and the 8th Circuit agreed. But the U.S. Supreme Court disagreed. It said that borrowers preserve their recession rights by sending written notice to the lender within the three-year time period. Borrowers do not have to bring a lawsuit during this time period in order to preserve their rights under TILA.