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Publication Date

2015

Abstract

During the Financial Crisis of 2008 and the Great Recession that followed, homeowner defaults and foreclosures increased dramatically. These homeowners facing foreclosure had few options to obtain relief and little leverage to negotiate with their lenders. One of the few places they could turn was to the Truth in Lending Act (TILA), which provides that consumers can rescind certain home loans for up to three years after loan closing if the lender failed to make certain material disclosures to the consumer prior to closing. In the wake of the Financial Crisis, a circuit split emerged regarding this three-year temporal limitation. Some courts held that, in order to rescind, the consumer must file suit within three years of the consummation of the transaction(the File Suit Approach), while others held that the consumer must only provide notice to the lender of its intention of rescind within such period (the Notice Only Approach). This issue may seem like a mundane technicality, but failing to exercise one's right to rescind in a timely manner could foreclose the consumer's only avenue for relief. This Note argues that the correct, and more practical, interpretation of the statute is the File Suit Approach.

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