The United States Supreme Court issued a decision on Tuesday providing homeowners the right to nullify mortgages where lenders violated the Truth in Lending Act. The unanimous 9 to 0 vote involved the case of a couple from Minnesota who secured a 611,000 home mortgage loan in 2007. The loan issuer was Countrywide Home Loans, Inc., a financial institution that was later absorbed by Bank of America Corp.
During the proceedings, the Supreme Court justices decided that mortgage holders will only be required to send a letter to their creditor. They do not have to file a lawsuit to qualify for protection under the Truth in Lending Act.
Three-Year Time Period to Qualify
The Truth in Lending Act gives mortgage holders a three-year time period in which to rescind a mortgage in cases where a lender fails to inform them about different details pertaining to the loan. For example, consumers must be notified about interest rates and finance charges. In the instant Supreme Court case, the loan holders submitted their letter within the three-year limitation. After the bank disputed their claim, they filed suit to preserve their rights in court.
According to Justice Antonin Scalia, the law provides that immediate rescission (nullification of the mortgage) take place, as soon as the creditor is notified of the borrower's wish to rescind.
Homeowners usually invoke the rights and protections offered by the Truth in Lending Act when they are having a difficult time paying their mortgage bills. Consumer rights attorneys claim that numerous mortgage firms acted in violation of the law following the 2008 financial downturn.
Appeals Courts Disagreed on the Issue
Leading up to this recent decision, appeals courts throughout the nation have offered differing opinions on the procedural steps mortgage holders must take in order to qualify for rescission. In this case, the couple was appealing a lower-court ruling that was not in their favor.
Homeowners who want to rescind their home mortgages can speak with a real estate attorney or home loan attorney to assess their current legal situation. While the process for obtaining this legal remedy sounds as simple as writing a letter, getting professional assistance in drafting that letter can be immeasurably helpful, both to ensure that the letter is taken seriously and to ensure that it is written in a way that complies with the law.
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