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46 Legal Industry Update National Focus L A U R E N R I D D I C K & L O U I S M A N E T T I , C O D I L I S & A S S O C I A T E S , P . C . THE POTENTIAL POWER OF A POSTAGE STAMP In the October 2014 term, the United States Supreme Court will resolve a split among the district courts about the federal Truth in Lending Act (TILA). In Jesinoski v. Countrywide Home Loans, Inc., the issue before the court is whether sending a notice of rescission to a lender is sufficient to unwind the mortgage, or whether a lawsuit needs to be filed to enforce rescission if the lender does not agree to rescind. But separate from the issue raised in the case, its mere presence in the Supreme Court highlights an important issue about TILA. In Jesinoski, "[the appellants] do not claim any substantive defect in the disclosures, nor do they claim that the lender failed to provide the disclosures at all; they claim only that they did not receive duplicates of the required forms." 1 e appellee's brief notes that this fact pattern has resulted in a "mine run of TILA rescission cases." 2 Put differently, the sole TILA violation alleged in a case before the United States Supreme Court is that only one copy of a document was given to a borrower. A clear understanding of TILA's rescission process as well as the central document in the "mine run" of TILA cases—the Notice of Right to Cancel—is necessary for proper implementation of these regulations. Industry professionals must know how district courts have reached different conclusions about what is required to rescind under TILA, and they also must come to a decision on whether the two-copy requirement has outlived its usefulness and now only serves to invite reoccurring and expensive litigation. BACKGROUND: TRUTH IN LENDING ACT AND MORTGAGE RESCISSION TILA was enacted by Congress in 1968 to encourage the "informed use of credit" by mandating that lenders provide "meaningful disclosure of credit terms". 3 It was intended to make credit transactions more transparent to aid those consumers who had difficulty understanding the nature of credit obligations and the costs of payment deferral. 4 In keeping with this purpose, TILA requires lenders to provide clear information regarding finance charges, annual percentage rates, and borrowers' rights. A lender's failure to comply with these provisions carries many potentially heavy punishments, one of which is rescission of the entire mortgage transaction. TWO-PRONGED RESCISSION REMEDY "When a loan is rescinded, the borrower is released from the obligation under the mortgage" and is "entitled to reimbursement of all finance charges, as well as other charges." 5 Rescission is "the most draconian remedy available" to certain borrowers under TILA. 6 (e right does not extend to purchase-money mortgages or to those mortgages secured by property other than the borrower's principal

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