The CFPB filed an amicus brief in the Tenth Circuit setting forth its interpretation of the rescission period under the Truth in Lending Act. TILA provides consumers a statutory right to rescind certain types of mortgages within three days after consummation of a loan where a lender provides the required disclosures. If a lender fails to provide the consumer with the required disclosures, the right to rescind expires three years after consummation of the loan or upon sale of the home, whichever occurs first. A consumer can exercise the right to rescind by notifying the creditor of his/her intention to rescind the loan.
In this case, defendant never provided plaintiff with the required disclosures. Although plaintiff notified defendant of her right to rescind within 3 years, the district court held that the right of rescission also requires the consumer to file an action against the lender for any disputes regarding the rescission, which plaintiff, here, did not do. In its amicus brief, the CFPB argued that the recession period under TILA only defines the time to notify the lender and not the time to sue the lender.
Click here for the CFPB’s amicus brief.