Loan Disclosures – Consequences to Lender can be great for failure to disclose.


tilA borrower may be able to walk away from his mortgage just by sending the lender a letter within three years of executing the loan documents.  At least that’s what the U.S. Supreme Court recently said in the case Jesinoski v. Countrywide Home Loans . This right is fairly limited, of course.  Under the Truth In Lending Act (“TILA”), borrowers on home mortgages generally have a three-day right of rescission after the lender provides certain disclosures that are required by TILA.  If the lender provides the disclosures at or prior to closing, the right of rescission is cut off three days later.  If, however, the mortgage lender fails to provide the borrower with the mandatory disclosures, the TILA three-day period expands … to up to threeyears after closing (at which point the right of rescission ends, regardless of whether the disclosures were made). Moving forward, lenders need to ensure they make all TILA-required disclosures at or before closing and treat any document executed by the borrower affirming such receipt as carefully as they would the original note.


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