Jesinoski et ux. v. Countrywide Home Loans, Inc., et al.

Supreme Court of the United States

In this case, argued before the Court on November 4, 2014, and decided January 13, 2015, the Court reversed and remanded the decision of the Eighth Circuit Court of Appeals.

Exactly three years after borrowing money from Countrywide Home Loans, Inc., to refinance their home mortgage, Larry and Cheryle Jesinoski sent Countrywide and Bank of America Home Loans, which had acquired Countrywide, a letter purporting to rescind the transaction. Bank of America replied, refusing to acknowledge the rescission's validity. A year and a day later, the Jesinoskis filed suit in federal court, seeking a declaration of rescission and damages. The District Court entered judgment for Countrywide and BofA, concluding that a borrower can exercise the Truth in Lending Act's right to rescind a loan, see 15 U. S. C. §1635(a), (f), only by filing a lawsuit within three years of the date the loan was consummated. The Jesinoskis' complaint, filed four years and one day after the loan's consummation, was ineffective. The Eighth Circuit affirmed.

The Supreme Court, in a unanimous opinion delivered by Justice Scalia, 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. Section 1635(a)'s unequivocal terms—a borrower "shall have the right to rescind . . . by notifying the creditor . . . of his intention to do so" (emphasis added)—leave no doubt that rescission is effected when the borrower notifies the creditor of his intention to rescind. This conclusion is not altered by §1635(f), which states when the right to rescind must be exercised, but says nothing about how that right is exercised. Nor does §1635(g)—which states that "in addition to rescission the court may award relief . . . not relating to the right to rescind"—support [the lenders'] view that rescission is necessarily a consequence of judicial action. And the fact that the Act modified the common-law condition precedent to rescission at law, see §1635(b), hardly implies that the Act thereby codified rescission in equity."

SCOTUS's decision settles the question of how a mortgagor must exercise his right to rescind: a suit isn't required. Whether the Jesinoskis had the right to rescind the mortgage was not decided; hence the remand to the lower court.