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Sherzer v. Homestar Mortgage Services

Sherzer v. Homestar Mortgage Services, No. 11-4254 (3d Cir. Feb. 5, 2013)
In precedential decision, the Third Circuit held that an obligor may exercise her right to rescind a loan subject to TILA by notifying the creditor in writing within the three-year statutory period, reasoning that the plain language of TILA § 1635 does not also require filing suit within that period. Contrary to the Ninth and Tenth Circuits, the Court found that the Supreme Court's decision in Beach v. Ocwen, 523 U.S. 410 (1998) provides only "weak support" for the view that the obligor must also file suit within the statutory period.
Procedural context:
Appellants Daniel and Geraldine Sherzer appealed from decision of district court granting Homestar Mortgage Services' Motion for Judgment on the Pleadings and dismissing Appellant's Complaint seeking recission and related relief under TILA § 1635.
The Sherzers obtained a loan secured by a mortgage on their principal dwelling from Homestar. Less than three years later, Sherzers' counsel informed lenders by letter that the Sherzers were exercising their right to rescind the loan agreement under § 1635 for failure to provide mandatory disclosures under TILA. The lenders denied that they materially violated TILA, and the Sherzers filed suit more than three years after the loan closing date. The lenders argued that TILA, Supreme Court precedent, and practical concerns require finding that TILA requires obligors to file suit within three years.
Sloviter, Rendell and Hardiman, Circuit Judges

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