January 21, 2015
Supreme Take on Truth in Lending
The United States Supreme Court issued its ruling in Jesinoski v. Countrywide Home Loans, Inc., No. 13-684 (Jan. 13, 2015). Jesinoski resolved a circuit split regarding notice requirements under the Truth in Lending Act (TILA) that apply when a homeowner is rescinding certain types of home mortgage loans.
Justice Scalia wrote the short opinion for a unanimous Court. The Court held 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.” (syllabus at 1) Countrywide had argued that the borrower had to file suit within that 3-year period. In finding for the borrowers, the Court found that the language of the statute was “unequivocal.”
While some have said that this result will lead to borrowers walking away from their loans, that is unlikely to occur in all but a handful of cases. That is because in order to rescind the loan, a borrower would need to tender back the original loan proceeds. Hard to imagine too many borrowers being able to do that.
The opinion is important because it resolves a significant circuit split, but its unanimity reflects that this case was perceived by the members of the Court as a straightforward question of statutory interpretation. As such, it does not appear to be signaling much about the Court’s approach to consumer protection jurisprudence more generally.
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