Currently, there is a split in the U.S. Federal Circuit Courts of Appeal regarding the Truth in Lending Act’s (TILA) right of rescission.
Under TILA, a borrower is permitted to rescind their mortgage loan within three days of closing or when the required rescission forms are delivered, whichever is later. If the disclosures are not made, the right of rescission expires three years after consummation of the loan.
The issue the circuit courts can’t agree on is what actions the borrower must take in order to have a valid rescission.
Some of the courts have held that the borrower need only provide the lender with a notice of rescission within the three-year time period. Once that notice has been provided, those courts will allow the borrower to sue for rescission even if the suit is filed more than three years after the violation.
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