The U.S. Supreme Court Unanimously Rules Against the Creditor in Jesinoski

By Stephen A. Fogdall

We predicted here that at least five U.S. Supreme Court Justices would reject the creditor’s argument in Jesinoski v. Countrywide Home Loans, Inc. that a borrower must file a lawsuit within three years of the consummation of the loan in order to preserve the statutory right to rescind under the Truth in Lending Act. As it turned out, the Court rejected that argument unanimously, holding instead that mere written notice to the creditor within the three-year period is sufficient. “[The statute] explains in unequivocal terms how the right to rescind is to be exercised,” the Court stated. “It provides that a borrower ‘shall have the right to rescind . . . by notifying the creditor . . . of his intention to do so’ (emphasis added). The language leaves no doubt that rescission is effected when the borrower notifies the creditor of his intention to rescind. It follows that, 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.”