TILA Violation Statute of Limitations clarified to three years

In the 9th Circuit Court of Appeals case of McOmie-Gray v. Bank of America Home Loans, the Court settled the issue of how long a consumer borrower has to rescind a loan based on a TILA violation.  

Plaintiff sought rescission of her loan secured by a trust deed with the Bank for alleged violations of disclosure requirements under the federal Truth in Lending Act (TILA).  The trial court granted Bank's motion to dismiss saying that the claim was brought more than three years after the violation occurred.  The applicable statute of limitations falls under 5 U.S.C. 1635(f).  Borrower's agruement was that because she gave the Bank timely notice of rescission, she was not required to bring suit within the three-year period, and the district court erred in dismissing the case. The 9th Circuit Court of Appeals held that, under the court's precedent and Supreme Court precedent, the time limit established by section 1635(f) was applicable, which is a three-year statute of repose (limitation), requiring dismissal of a claim for rescission brought more than three years after the consummation of the loan secured by the first trust deed, regardless of when the borrower sent notice of rescission. Accordingly, the court affirmed the judgment of the district court.

The importance of the decision is to bring finality to TILA violations.  Once the loan is three years old, TILA is no longer a viable claim.