The U.S. Supreme Court on Tuesday adopted a borrower-friendly interpretation of a federal law that gives consumers the right in some circumstances to unwind certain mortgage loans.
The case examined the Truth in Lending Act, which allows borrowers to rescind loans like mortgage refinances and home-equity loans within three days after the transaction is consummated, or until the lender has delivered the required disclosures about the terms of the loan agreement. The law places a three-year time limit on a borrower’s right to rescind, even if the creditor still hasn’t provided all the necessary loan disclosures.
Consumer and civil-rights groups had filed a brief with the high court supporting a Minnesota couple who sued to get out of a 2007 mortgage refinancing, saying the rescission right was an important means for protecting consumers against abusive lending practices.
The high court, in an opinion by Justice Antonin Scalia , ruled unanimously that borrowers need only notify the creditor within three years of their intent to rescind. The court rejected the position of Bank of America Corp. ’s Countrywide Home Loans subsidiary, which argued that borrowers must take the additional step of filing a lawsuit within three years if the two sides disagree on whether proper loan disclosures have been provided.
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| Justice Antonin Scalia Getty Images |
“So long as the borrower notifies within three years after the transaction is consummated, his rescission is timely. The statute does not also require him to sue within three years,” Justice Scalia wrote in a short five-page opinion.Read the rest of the story HERE.
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