Background

• Sherzers obtained two mortgages on their principal dwelling in 2004, for $705,000 and $171,000, subsequently assigned to HSBC Bank.
• On May 11, 2007, sherzers’ counsel sent a written rescission notice to lenders alleging TILA disclosure violations and asserting rescission under 15 U.S.C. § 1635.
• HSBC rescinded only the smaller loan; the larger loan's rescission was denied by lenders, prompting litigation in the Eastern District of Pennsylvania (Nov. 30, 2007 filing).
• Lenders moved for judgment on the pleadings, arguing rescission claims filed after three years are time-barred under § 1635(f).
• District Court dismissed; Sherzers appealed, contending rescission is effected by notice within three years and does not require suit within that period.
• Issue on appeal: whether the right of rescission under TILA is triggered by a valid written notice alone or requires timely filing of suit within the three-year period.

Issues

Key Cases Cited

• Beach v. Ocwen Federal Bank, 523 U.S. 410 (U.S. 1998) (right to rescind duration; does not address method of exercise)
• Gilbert v. Residential Funding LLC, 678 F.3d 271 (4th Cir. 2012) (notice within three years suffices to exercise right; court enforcement later)
• Williams v. Homestake Mortgage Co., 968 F.2d 1137 (11th Cir. 1992) (rescission can occur upon notice; enforcement via subsequent proceedings)
• Rosenfield v. HSBC Bank, USA, 681 F.3d 1172 (10th Cir. 2012) (argues that filing within three years is required)
• Yamamoto v. Bank of N.Y., 329 F.3d 1167 (9th Cir. 2003) (notice-only interpretation discussed)
• McOmie-Gray v. Bank of Am. Home Loans, 667 F.3d 1325 (9th Cir. 2012) (three-year window; discussion of notice vs. suit)
• Large v. Conseco Fin. Servicing Corp., 292 F.3d 49 (1st Cir. 2002) (statutory interpretation on rescission mechanics)
• Omlid v. Sweeny, 484 N.W.2d 486 (N.D. 1992) (rescission contexts; equity vs. law distinctions)