The Truth in Lending Act (TILA) is a federal consumer protection law that requires mortgage lenders to make specific disclosures to borrowers at closing. When lenders fail to make those disclosures correctly, borrowers may have the right to rescind (cancel) the mortgage -- voiding the lender's lien on the property. In the context of a Florida foreclosure, a valid TILA rescission claim can be a powerful defense.
This guide explains the TILA rescission right under 15 U.S.C. 1635, the landmark Jesinoski decision, which Florida mortgages are covered, and what to do if you believe your lender made disclosure violations.
What TILA Requires: The Right to Rescind
Under TILA (15 U.S.C. 1635) and its implementing regulation, Regulation Z (12 CFR Part 1026.23), a borrower in a qualifying non-purchase-money mortgage transaction has:
- A 3-business-day right to rescind after closing if all required disclosures are properly made
- An extended 3-year right to rescind if the lender fails to deliver the Notice of Right to Rescind or material disclosures in proper form
When a borrower validly rescinds, TILA provides that the security interest (the mortgage lien) automatically becomes void. This means the foreclosure cannot proceed on a properly rescinded mortgage.
Which Florida Mortgages Are Subject to TILA Rescission?
| Transaction Type | TILA Rescission Applies? |
|---|---|
| Purchase money mortgage (used to buy the home) | No -- explicitly excluded under 15 U.S.C. 1635(e)(1) |
| Refinance of primary residence | Yes -- including cash-out and rate/term refinances |
| Home equity loan (second mortgage) on primary residence | Yes |
| HELOC (home equity line of credit) on primary residence | Yes |
| Investment property or second home | No -- TILA rescission is limited to primary residences |
| Business purpose loans | No -- TILA applies only to consumer credit transactions |
For many Florida homeowners facing foreclosure on refinanced mortgages -- which were common during the early-to-mid 2000s lending boom -- TILA rescission is potentially relevant if closing documents were defective.
The Jesinoski Decision: Notification Is Enough
Before 2015, courts were split on whether a borrower had to file a lawsuit within the 3-year TILA rescission period. The U.S. Supreme Court resolved this question in Jesinoski v. Countrywide Home Loans, Inc., 574 U.S. 259 (2015):
"A borrower need only provide written notice to the lender within the three-year period, not file suit within that period."
This is critical for Florida foreclosure defense. Borrowers who sent a written TILA rescission notice within 3 years of closing -- even if they did not file a lawsuit within that 3-year period -- can assert the rescission as a defense in a foreclosure action brought later.
If you sent a rescission letter within 3 years of your closing and the lender did not respond or refused to honor it, consult a Florida consumer protection attorney immediately. The lender's failure to honor a valid rescission notice creates additional legal claims.
Common TILA Disclosure Violations That Trigger the 3-Year Window
The 3-year extended rescission period is only available if the lender failed to make required disclosures. Common TILA violations include:
- Failure to deliver two copies of the Notice of Right to Rescind to each eligible borrower
- Inaccurate Annual Percentage Rate (APR) disclosure (off by more than the allowed tolerance)
- Incorrect finance charge calculation
- Failure to include required fees in the finance charge calculation
- Defective notice format (notice missing required language or disclosures)
- Delivering disclosures after closing rather than at or before closing
Practical Limits: The Tender Requirement
Even if a Florida borrower has a valid TILA rescission claim, courts have imposed an important practical limitation: the borrower must tender back the loan proceeds. Under 15 U.S.C. 1635(b), rescission creates a mutual obligation -- the lender releases the lien, and the borrower returns the money received.
Courts vary on how strictly they apply this requirement. Some courts have allowed conditions on tender (for example, requiring rescission to be conditioned on the lender first releasing the lien), while others have dismissed TILA rescission claims where the borrower cannot demonstrate ability to tender. This limitation has significantly narrowed the practical impact of TILA rescission for many Florida borrowers.
TILA Rescission vs. Other Foreclosure Defenses
TILA rescission is one of several potential defenses in a Florida foreclosure. Other defenses include:
- Lack of standing -- lender cannot prove it owns and holds the note
- Lost note defense -- lender cannot produce the original promissory note
- Pre-suit notice violations -- lender failed to comply with F.S. 702.015 notice requirements
- Statute of limitations -- the lender waited too long to bring the foreclosure action
- Filing an answer -- raising defenses in a timely answer prevents default judgment
About Barrett Henry
Barrett Henry is a Broker Associate at REMAX Collective with more than 23 years of Florida real estate experience. While TILA rescission is a legal defense that requires a licensed Florida attorney, Barrett helps homeowners understand the full range of options available -- including when selling the property through a pre-foreclosure sale or short sale may resolve the situation more quickly and reliably than litigation. Barrett serves Tampa Bay directly and statewide through a trusted referral network covering all 67 Florida counties.
Facing foreclosure on a refinanced Florida mortgage? Contact us for a free consultation.
