CONSUMER LAW - RECISSION

Jesinoski v. Countrywide Home Loans, Inc., No. 13-684 (January 13, 2015) is the SCOTUS case resolving a split among the federal courts of appeals in favor of consumers. The Supreme Court held in Jesinoski v. Countrywide Home Loans, Inc. that a consumer may exercise the right to rescind a loan under the federal Truth in Lending Act simply by notifying the creditor rather than (as the creditor contended and as several federal courts had held) by filing a lawsuit.

The facts of the case are, according to Oyez.org:

"On February 23, 2007, Larry and Cheryle Jesinoski refinanced their Eagan, Minnesota, home by borrowing $611,000 from Countrywide Home Loans, Inc. The Jesinoskis received a Truth in Lending Act (TILA) disclosure and a Notice of the Right to Cancel, which gave them until midnight on February 27, 2007, to rescind the loan. The Jesinoskis did not exercise their right to cancel the loan, and they used the money to pay off several consumer debts. On February 23, 2010, the Jesinoskis attempted to rescind the loan and argued that they did not receive sufficient copies of the TILA disclosure and the Notice of the Right to Cancel. After the request to rescind the loan was denied, the Jesinoskis sued Countrywide Home Loans for failure to rescind their loan on February 24, 2011.

Countrywide Home Loans sought a judgment on the pleadings and argued that the Jesinoskis did not file their suit within the three-year time period allowed by TILA. The Jesinoskis argued that, because they attempted to rescind the loan within the three-year time period, their suit fulfills that requirement and should be allowed to proceed. The district court found in favor of Countrywide Home Loans; the U.S. Court of Appeals for the Eighth Circuit affirmed."

Of course, Thte ruling doesn’t necessarily mean homeowners will be able to escape paying their mortgages. The Jesinoski case now returns to a lower court, where the bank will have a chance to argue that the couple received the required forms.  And then assuming the Jesinoskis can rescind, how is the bank repaid and how much?