The Sound of Silence: The Continuing Debate Over Class Action Rescission Under TILA

Abstract:     
In 1995, Congress amended TILA so that massive lender liability could no longer result from minor errors in disclosure. In that same year, Congress passed a moratorium on class action claims under TILA; the moratorium was lifted on October 1, 1995. The new amendments balanced lender and consumer interests by raising the TILA tolerance bar from $10 to $100. Cases that fell above the new $100 tolerance bar could proceed forward on the merits; those that fell below could not.

This paper analyzes decisional law on the issue of whether class action TILA rescission remains an available remedy for consumers. In this current housing crisis, lenders argue that class action rescission should not be available given the potential for large liability. Consumers, particularly those who seek out pre-default or pre-bankruptcy remedies, assert that TILA should allow rescission in class form.

Number of Pages in PDF File: 30

Keywords: Truth in Lending, mortgage lending, rescission, class action rescission

JEL Classification: A10, A11, A12, A13, A14, A19

Accepted Paper Series