Right of Rescission: Michigan Court Ruled Each Borrower Must Receive Two Notices of Right to Cancel.

The Michigan Court of Appeals has held that a mortgagor who is entitled to a notice of the right to rescind is in fact entitled to two copies of that notice for each borrower.

In this case, each borrower was only provided with one copy of the notice of right to rescind the transaction.

The Court found that:

…the failure to provide the second copy of the notice of right to rescind was a technical violation, but one that would nevertheless trigger the consequence of the lenders failure to provide both copies. That is, the borrowers would be permitted to cancel the transaction for up to three years after consummation.

In this case, the borrowers were permitted to cancel the mortgage transaction approximately two years after the loan closed.

The court found that the spirit of the right to rescind under the Truth in Lending Act requires the finding that failure to provide a second copy of the notice extends the time to cancel to three years after closing. Kociss vs. Pierce, 192 Mich. App. 92.

Author: Charles R. Harroun, Attorney at Law