In the News January 30, 2015

Frank Hirsch Quoted in Reuters Consumer Financial Services Law Report

The U.S. Supreme Court ruled that the Truth in Lending Act requires that a borrower must only provide written notice to the lender of his intention to rescind a loan, not file suit within three years of the date a loan is consummated.

“From the lending industry perspective, this is an unfortunate but not unexpected ruling by SCOTUS when considering the statutory language at issue and the questions asked by the Court at oral argument in this case,” said Frank Hirsch, Jr., partner and co-chair of Alston & Bird’s Financial Services Litigation team. “If notice is all that is required to trigger a rescission fight in a TILA-covered loan transaction, then at least in the mortgage lending context you can expect to see lenders challenging these rescission notices vigorously by filing declaratory judgment lawsuits, perhaps in federal court, and asking for immediate rulings that the disclosures were adequate and the attempted rescission notice is in effective.”

Hirsch continued: “Federal judges may not be very keen on the added case load which may result. However, if the stakes are significant enough and the loan transaction is to be securitized, such protective actions may become common-place. Of course, there is the possibility of a legislative correction somewhere down the road, but until then, the industry will face some uncertainty risk and some additional costs associated with some sub-set of TILA-covered lending.”
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