The U.S. Supreme Court gave homeowners more ability to cancel their mortgages if lenders don’t provide the required disclosures, in a setback for the banking industry.
The dispute centered on the three-year deadline for borrowers seeking to rescind their mortgages. The justices today said unanimously that borrowers don’t have to file suit within three years and instead can meet the deadline by sending a letter to lenders.
The banking industry says the issue has arisen frequently in recent years with borrowers who are in default on mortgages and facing foreclosure.
Under the U.S. Truth in Lending Act, borrowers have three days to rescind a mortgage after they receive the disclosures. That right expires after three years, even if the forms are never provided.
In his opinion for the court, Justice Antonin Scalia wrote that the lending statute says “in unequivocal terms” that the borrower can rescind the mortgage simply by notifying the lender.
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