by Jeff Sovern
Two weeks ago, as Scott posted, the Supreme Court decided Jesinoski v. Countrywide Home Loans, Inc., holding that consumers may rescind under the Truth in Lending Act by so notifying the lender, and that the statute does not require the consumer to file a lawsuit to rescind. So you might think that the decision will cut down on the amount of litigation. But no, suggest some lawyers quoted in an American Banker article, Legal Battles Only Beginning After Key Rescission Ruling. They argue that by making it easier for consumers to rescind, the Court's decision will lead to more consumers rescinding, producing an increase in frivolous rescissions. The result will be that more lenders sue to declare the rescission invalid. Maybe. But will consumers who are not advised by counsel even know of the right to rescind? Some evidence suggests that consumers are often not aware of that right. Yes, some consumers do have lawyers, but how likely is it that those lawyers will advise their clients to rescind when rescission is not justified? The article notes that the CFPB has rule-making power in the area, but I hope that the Bureau will hold off on promulgating rules until it is demonstrated that a problem actually exists.