The right of rescission provided by the Truth in Lending Act is well-known to participants in the residential mortgage market: TILA provides that a borrower has a right to rescind a loan “until midnight of the third business day following the consummation of the transaction or the delivery of the [TILA disclosures], whichever is later.” (15 U.S.C. § 1635(a)). Thus, within the rst three days following consummation of a covered loan, a borrower’s right of rescission is unconditional. After that, a borrower’s right to rescind is conditioned upon a failure of the lender to provide the required disclosures.
As the Supreme Court noted, however, “this conditional right to rescind does not last forever” and, quoting § 1635(f), “[e]ven if a lender never makes the required disclosures, the ‘right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever comes first.’”
At issue in Jesinoski was the question of what, exactly, a borrower must do within that three-year period to exercise the right to rescind provided by TILA. The Jesinoski's argued that mere notice to its lender within the three-year period was suf- cient to exercise its right of rescission. Countrywide argued that the statute required a borrower to le suit.
Despite a hefty dose of questions at oral argument that seemed to indicate the automatic rescission interpretation was balderdash, Justice Scalia decided otherwise — and was joined by a unanimous court: “The language [of TILA] leaves no doubt that rescission is effected when the borrower notifies the creditor of his intention to rescind.”