Tag Archives: loan closing

Supreme Take on Truth in Lending

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The United States Supreme Court issued its ruling in Jesinoski v. Countrywide Home Loans, Inc., No. 13-684 (Jan. 13, 2015).  Jesinoski resolved a circuit split regarding notice requirements under the Truth in Lending Act (TILA) that apply when a homeowner is rescinding certain types of home mortgage loans.

Justice Scalia wrote the short opinion for a unanimous Court. The Court held that a “borrower exercising his right to rescind under the Act need only provide written notice to his lender within the 3-year period, not file suit within that period.” (syllabus at 1) Countrywide had argued that the borrower had to file suit within that 3-year period. In finding for the borrowers, the Court found that the language of the statute was “unequivocal.”

While some have said that this result will lead to borrowers walking away from their loans, that is unlikely to occur in all but a handful of cases. That is because in order to rescind the loan, a borrower would need to tender back the original loan proceeds. Hard to imagine too many borrowers being able to do that.

The opinion is important because it resolves a significant circuit split, but its unanimity reflects that this case was perceived by the members of the Court as a straightforward question of statutory interpretation. As such, it does not appear to be signaling much about the Court’s approach to consumer protection jurisprudence more generally.

Weigh in on Mortgage Closing “Pain Points”

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The Consumer Finance Protection Bureau has issued a Request for Information Regarding the Mortgage Closing Process. The CFPB wants

information from the public about mortgage closing. Specifically, the Consumer Financial Protection Bureau (CFPB) seeks information on key consumer “pain points” associated with mortgage closing and how those pain points might be addressed by market innovations and technology.

The CFPB seeks to encourage the development of a more streamlined, efficient, and educational closing process as the mortgage industry increases its usage of technology, electronic signatures, and paperless processes. The next phase of CFPB’s Know Before You Owe initiative aims to identify ways to improve the mortgage closing process for consumers. This project will encourage interventions that increase consumer knowledge, understanding, and confidence at closing.

This notice seeks information from market participants, consumers, and other stakeholders who work closely with consumers. The information will inform the CFPB’s understanding of what consumers find most problematic about the current closing process and inform the CFPB’s vision for an improved closing experience. (79 F.R. 386)

The CFPB is particularly interested in responses to the following questions:

1. What are common problems or issues consumers face at closing? What parts of the closing process do consumers find confusing or overwhelming?Show citation box

2. Are there specific parts of the closing process that borrowers find particularly helpful?

3. What do consumers remember about closing as related to the overall mortgage/home-buying process? What do consumers remember about closing?

4. How long does the closing process usually take? Do borrowers feel that the time at the closing table was an appropriate amount of time? Is it too long? Too short? Just right?

5. How empowered do consumers seem to feel at closing? Did they come to closing with questions? Did they review the forms beforehand? Did they know that they can request their documents in advance? Did they negotiate?

6. What, if anything, have you found helps consumers understand the terms of the loan? (79 F.R. 387)

It is rare that a federal agency requests information and comments from the Average Joe, Joe Sixpack and Joe the Plumber. So this is a chance for educated consumers of mortgages to be heard at the highest levels about the flaws in the home loan closing process. I encourage readers of REFinblog.com to make their voices heard!