Alert February 09, 2010

Federal Appeals Court Confirms that TILA Rescission Remedy Only Applies to Consummated Transactions

The Fourth Circuit recently held that consumers do not have a right to rescind a loan under the Truth in Lending Act unless the loan transaction is actually completed. Plaintiffs applied for a mortgage refinance, but did not complete the transaction after a lower-than expected appraisal resulted in the lender imposing a discount point to close the loan. Plaintiffs then demanded a refund of their non-refundable $500 deposit, and sued seeking statutory rescission under TILA when the lender would not refund its out-of-pocket costs for an appraisal and credit report. The Fourth Circuit affirmed the district court’s grant of summary judgment on the grounds that the right to rescind under TILA only applies to a consummated transaction. Here, plaintiffs never completed the transaction, so they had no right to rescind. Click here for Weintraub v. Quicken Loans, Inc., No. 08-2373 (4th Cir. February 5, 2010).