Jesinoski v. Countrywide Home Loans, Inc.
The Supreme Court ruled that a borrower cancels a loan under the Truth in Lending Act simply by sending the lender written notice within three years of the loan, without needing to also sue within that window.
The unanimous decision reverses a lower-court ruling that had thrown out a couple's rescission claim because they sued one day after the three-year mark, even though they had mailed their cancellation notice on time.
How it got here: A federal trial court ruled for the lender on the pleadings, the Eighth Circuit affirmed, and the couple asked the Supreme Court to review.
The Case in Depth
What happened
A married couple refinanced their home mortgage with a lending company, borrowing $611,000. Exactly three years later, they mailed the lender a letter attempting to cancel, or "rescind," the loan under a federal consumer-protection law. The lender's successor refused to accept the cancellation. The couple then filed a federal lawsuit seeking a court declaration that the loan was rescinded, along with damages.
The question before the Court
Could a homeowner cancel a mortgage loan under federal truth-in-lending law just by sending a written notice, or did the homeowner also have to file a lawsuit within three years?
Why it matters
Borrowers seeking to cancel home loans over inadequate disclosures now know that mailing a timely notice is enough to preserve their rescission rights, even if a lawsuit over the lender's refusal to honor that notice comes later. Lenders can no longer defeat rescission claims solely because a suit was filed after the three-year mark.
What changes now
The case is sent back to the lower courts for further proceedings consistent with the ruling. Because the couple's written notice was timely, their rescission claim can now proceed on the merits, including disputes over whether the lender's disclosures were adequate and what remedies, if any, are owed. This is a final decision on the legal question, not a temporary order.
What this does not decide
The Court did not decide whether the lender actually failed to make required disclosures or whether the couple's rescission was ultimately valid on the merits — only that sending timely written notice, not filing a lawsuit, is what the law requires to exercise the rescission right.
How the Court got there
The legal reasoning, step by step
- The Court focused on the statute's plain text, which says a borrower 'shall have the right to rescind... by notifying the creditor... of his intention to do so,' treating the act of notifying itself as what completes rescission.
- Because the language ties rescission directly to sending notice, the Court concluded that a borrower who notifies the lender within three years has validly rescinded, without any additional requirement to sue within that period.
- The Court considered the provision setting a three-year outer limit on the right to rescind and found it addresses only when the right must be used, not how it must be used, so it does not add a lawsuit requirement.
- The Court also rejected the lender's argument that a separate provision allowing courts to award additional relief 'in addition to rescission' implied rescission always depends on a lawsuit; that provision only describes remedies available once a suit is filed for other reasons.
- The Court found that a provision removing the traditional requirement that a borrower return loan proceeds before rescinding did not mean Congress meant to adopt the common-law approach requiring a court decree, since the statute could simply be changing usual practice.
Doctrinal impact
Cases affected by this decision
Distinguishes Beach v. Ocwen Fed. Bank (523 U. S. 410)
Says that case only addressed the deadline for rescission, not whether a lawsuit is required to rescind.