On January 13, 2015, the U.S. Supreme Court ruled that under the Truth in Lending Act ("TILA"), borrowers merely need to provide written notice of their intention to rescind their mortgages within three years, and are not required either to file a lawsuit within that three-year period or tender the loan amount to the lender. In Jesinoski v. Countrywide Home Loans, Inc., the lender argued, and the lower courts had agreed, that TILA requires a borrower to actually initiate litigation within three years after the loan closed. You can find the opinion here.

If a lender fails to satisfy TILA's disclosure requirements, TILA grants borrowers the right to rescind a loan within three years after the loan closed. Prior to the U.S. Supreme Court's ruling, many courts had interpreted TILA as requiring borrowers actually to file a lawsuit for rescission of the loan. The U.S. Supreme Court's ruling means that lenders who receive a written notice from their borrowers purporting to rescind under TILA within three years after the loan closed will need to consider whether to take affirmative action. For example, a lender may want to file a declaratory judgment lawsuit rather than waiting to deal with the issue at some point in the future if their borrowers file their own complaint or, more likely, file a counterclaim for rescission in response to the lender's efforts to foreclose or otherwise enforce the loan.