Supreme Court allows homeowners to back out of mortgages

WASHINGTON, Jan. 13 (UPI) -- The U.S. Supreme Court upheld a provision Tuesday in the Truth in Lending Act that gives some borrowers three years to back out of mortgages.

The justices ruled unanimously in favor of a Minnesota couple and against Bank of America. The bank argued the law requires mortgage-holders to sue within the three-year deadline, but the justices found they need only give notice of their intention.

"So long as the borrower notifies within three years after the transaction is consummated, his rescission is timely. The statute does not also require him to sue within three years," Justice Antonin Scalia said in a short opinion.

Larry and Cheryle Jesinoski of Eagan, Minn., refinanced their mortgage by borrowing $611,000 from Countrywide Home Loans in 2007. They sent Countrywide, which had been acquired by Bank of America, a letter that said they intended to rescind on the loan, just meeting the three-year time limit.

The law, passed in 1968, gives borrowers three days to change their minds or up to three years if the lender has failed to deliver all required disclosure documents. The Jesinoskis said Countrywide failed to meet the act's disclosure requirements.

The bank's position was backed by trade groups while consumer groups filed a friend-of-the-court brief supporting the borrowers. The high court ruling reversed a federal appellate court that favored Bank of America in a split decision.