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CFPB files amicus brief in TILA appeal

Posted in Mortgages

On March 26, the CFPB filed an amicus brief in an appeal involving the Truth in Lending Act before the Tenth Circuit. The question presented in Rosenfield v HSBC Bank, USA is whether a lawsuit seeking rescission is timely where the consumer provided notice of rescission to the lender within three years of closing but did not file suit until after the three-year deadline had passed. In its brief, the CFPB takes the position that a borrower need only send notice of rescission to the lender within the three-year period to validly exercise a right to rescind.

The majority of courts that have looked at this issue, including the Ninth Circuit most recently, have concluded that the requirement for the borrower to also file suit within the three-year period is consistent with the language of section 1635 of TILA and prior precedent, including the U.S. Supreme Court’s decision in Beach v. Ocwen Fed. Bank. Nonetheless, the CFPB disagrees, taking the contrary position that notice is all that’s required. According to its brief, the CFPB intends to file amicus briefs taking the same position in at least three other appellate cases (which are in the Third, Fourth and Eighth Circuits).

While arguing that a borrower need not also file a rescission lawsuit within the three-year period, the CFPB provides no clear answer for the question of how long a borrower can wait to file suit.  Instead, the CFPB suggests only that a  time limit for bringing a rescission lawsuit may exist and offers possible sources for that limit.

In its press release announcing the amicus filing, the CFPB stated that “the CFPB is committed to filing amicus briefs in litigation involving the federal consumer financial protection laws that it oversees and in which the CFPB determines its views will assist the courts in correctly resolving the matters.” (The CFPB has also filed amicus briefs in two appeals involving the Fair Debt Collection Practices Act–one in the Tenth Circuit and the other in the Eleventh Circuit.)

We think it’s worth noting that the CFPB’s proactive approach stands in stark contrast to the approach taken by the Federal Reserve Board when it was charged with implementing federal consumer financial protection statutes such as TILA. When the Fed felt the courts were incorrectly interpreting the statute in question, the Fed would generally address the issue by proposing revisions to the implementing regulation or official staff commentary rather than by submitting an amicus brief.