Loan-Rescission Issue Taken Up by High Court
WASHINGTON (CN) - The Supreme Court agreed Monday to decide whether mortgage lenders should have rescinded a $611,000 home loan to a Minnesota couple.
Larry and Cheryl Jesinoski had mailed notices to Bank of America subsidiary Countrywide Home Loans and others three years to the day after consummating a $611,000 home loan.
Citing alleged violations of the Truth in Lending Act (TILA), the Jesinoskis said their loan should be rescinded.
The lenders denied the couple's requests and the Jesinoskis filed suit a year and a day from the date they mailed the letters.
A federal judge granted the lenders judgment on the pleadings, and the sole issue that went before the federal appeals court was "whether mailing a notice of rescission within three years of consummating a loan is sufficient to 'exercise' the right to rescind a loan transaction pursuant to 15 U.S.C. § 1635(a)."
The St. Louis, Mo.-based 8th Circuit also considered, "alternatively, whether a party seeking to rescind the transaction is required to file a lawsuit within the three-year statutory period."
In an unsigned September 2013 decision, the court affirmed judgment for the lenders.
The two-paragraph-long lead opinion cited recent circuit precedent from Keiran v. Home Capital Inc., which held that a party seeking to rescind a loan transaction must file suit within three years of consummating the loan.
One member of the three-judge panel wrote separately to say "that sending notice within three years of consummating a loan is sufficient to 'exercise' the right to rescind."
A second judge noted his belief that Keiran "was wrongly decided." But for circuit precedent, the judge said he would reverse "if the question presented were open in this circuit."
Per its custom, the U.S. Supreme Court did not issue any comment in granting the couple a writ of certiorari Monday.