CFPB Monitor News Guidance Perspectives of CFPB | Ballard Spahr Law Firm Blog

10th Circuit rescission decision rejects CFPB position

Posted in Mortgages

Another federal appellate court has now weighed in on the question of whether a lawsuit seeking rescission is timely where the consumer provided notice of rescission within three years of closing but did not file suit until after the three-year period had passed.

In its decision issued on June 11 in Rosenfield v. HSBC Bank,USA, the 10th Circuit ruled that notice alone within the three-year period is insufficient to validly exercise a right to rescind. The CFPB had filed an amicus brief in Rosenfield supporting the borrower’s position that she had validly exercised her right to rescind by sending notice to her mortgage holder within the three-year period. (We commented on the CFPB’s amicus brief in Rosenfield in posts on March 29 and March 30.) 

The 10th Circuit has now joined the Third and Ninth Circuits in holding that notice alone within the three-year period is insufficient. That leaves the Fourth Circuit as the only federal appellate court to hold to the contrary, which it did in its decision in Gilbert v. Residential Funding LLC. (We shared our thoughts on Gilbert in a May 9 post.)

We have prepared a detailed legal alert on the 10th Circuit’s decision in Rosenfield.  Ballard attorneys are currently acting as co-counsel to the defendants in Gilbert in filing a petition in the Fourth Circuit asking for a rehearing by the panel or before the full court.