U.S. Appeals Courts Split over Right of Rescission
Another U.S. appeals court has ruled that homeowners can extend their right to rescind a mortgage by simply filing a notice of rescission within the first three years of the loan.
The Third Circuit Court in Philadelphia ruled in Sherzer v. Homestar Mortgage Services that a borrower can bring a lawsuit seeking rescission after the statutory three-year period—provided they filed a notice within the three-year period.
Four appeals courts have ruled on this Truth in Lending Act rescission issue and two have sided with the borrowers and two with the lenders.
“This circuit split increases the likelihood that the U.S. Supreme Court will agree to hear the case if a petition for certiorari is filed,” according to attorneys at Ballard Spahr.
The Consumer Financial Protection Bureau filed an amicus brief in the Sherzer case supporting the homeowner and participated in the oral argument.