provision in sixteen thirty five a requires borrowers to file a lawsuit to exercise their right to resend the answer is no and the court of appeal should be reversed for three reasons the plain language of section hundred thirty five a statutory context of sixteen thirty five in the longstanding regulatory interpretation by the two agencies who have been charged with administering the provision i'd like to start with the plain text of sixteen thirty five a we've set out the language in the first page of our agenda and to the blue brief where a couple of things are quite important to take note of one is that the rescission right the mechanism that is set forth in the statute is by notifying the creditor and that's true whether the rescission occurs within three days were three years of the closing of the loan transaction the second thing that's important to the going out with let's talk about the first thing you say rescission is affected by ok it seems to me that it's common usage to for instance one could say on election day you vote by going to the precinct and presenting identification that is not how you do as it is for the three day cancellation reception that's the end of it but where there is something else to be done where you have to return whatever you have received under the under the transaction it seems to me more reasonable to read it as you know you vote by presenting yourself at the precinct and offering identification well congress could have written section six hundred thirty five that way but it didn't and when it wrote by no to find even if it was  within the three year period justice scalia it also provided that it had to be done in accordance with regulations of the bureau and when regulations see was promulgated in one thousand nine hundred sixty nine the federal reserve bank took exactly the same position that we're arguing notifying not to the consequence of notifying and it regulations email indeed say what the consequence is but i don't think that the statute authorizes rick regulations e to say that well the statute actually does say that and the b provision justice scalia we'll get to that in a moment but the point here is that nowhere in six hundred thirty five day did congress say you had to file a lawsuit and nowhere in regulations is there a provision that a borrower has to file a lawsuit in order to rescind and remember the definition of rescission is a unilateral cancellation of the transaction here is but a common will you had to give that what you had received and you have you you or urging that the statute creates a system in a a creditor who has a secured interest simply because somebody comes up almost three years later and says you didn't give me two copies of this particular document i got only one copy and even with that's not true in mediately the secured interest is converted into an security interest that is a huge difference and i find it difficult to believe that that's done in accordance with regulations the disclosures that need to be done have to be done in accordance with regulations and there have to be appropriate forms for the obligate work to exercise his right to rescind and that is also set forth in the regulations so i don't think sixteen thirty five a could be any clearer than it is notification by writing in accordance with the regulations set forth by the federal agencies that it's been you think this would play out so th it answers the question by making clear that the process that you set forth is what's supposed to happen automatically but then the very last sentence which reached the procedures prescribed by the subsection shall apply except when otherwise ordered by a court that sentence was added in one nine hundred eighty eight twelve years after the truth in lending act was originally probably dated and this reason why congress added that sentence was because there had been case law that raised the problem that you are identifying so what that sentence is intended to do is to give courts the flexibility to we were to the various provisions or slow things down so that the tender back actually happens in a way that does is not unfair to the lender and we have not found a single case in the forty five year history of this act where the borrower has gotten any kind of a windfall we've looked extremely hard at this but notably the reason why this precision happens this way there's a rationale for it and the rationale is that after the bar was put forth all this money to get the loan in the first place unless the borel can get back those proceeds and have the security interest released it's virtually impossible extremely difficult to get a refinancing on the property rescinding the banks in the back a letter saying you can't rescind because we give you all a duck and then nothing happens for a year and then the early for five years then sues i take it at that point the bank failures think that your limitations has run that that's right but the way that your hypothetical most commonly arises justice kennedy is in foreclosure states and that would be where the bank would wait for the bank under the procedures in section b has twenty days in which to tend it to pay back the loan proceeds that had been conferred to the borrower so the way this works in practice is that the bank takes its twenty days and if it investigates the loan file and it comes to the conclusion that it has an argument that the borrower has improperly sent a notice or it does what the bank did here which is to write a letter back and say we can test or  the rescission notice and actually continue to pay on but for those who don't the bank can file a declaratory judgment that's correct or and even for the ones who do they could do the same thing that's correct and in non judicial foreclosure states where to go back to your hypothetical justice kennedy there's there's a harder wrinkle on this a bank would not need to go to court to foreclose on the borrower it would simply do the notices provided under state law and have a sheriff you know send to provide a notice saying we're going to sell your house and then in that case the burden really shifts to the borrower to go to court to get a temporary restraining order or a preliminary injunction to say hey i sent my rescission notice the bank is ignoring it please don't sell my house out from under me and that kind of procedure makes a lot of sense in the real world where these kinds of written notifications provided by the expert agency charged with it ministering it create a simple process by which the rights of both sides can fairly be determined that's been the way the statute has been understood up until very recently when the circuit conflict developed really in response to this court's decision and b and beach was simply no means something that is both the only we or foreclosure state or a non judicial foreclosure state in the judicial foreclosure states the next thing that's likely to happen is that the bank would go to state court and file a foreclosure action at which point the validity of the rescission notice would be the first issue that would be decided by the court in determining whether or not the foreclosure was proper to begin with but if we're in a nontraditional disclosure state in the roughly fifty fifty among the states in terms of which are which then we have the problem that i was  identifying with just a sort of my or where the buyer is going to have to take the initiative to go to court to get a declaratory judgment that it had he or she had properly rescinded the loan so why do you think it is that congress that in say how we resolve disputes in this context well i think that the the answer to that is that congress expected that this unilateral ride of rescission was going to be exercised in a simple way through the written notification and that what has happened if congress couldn't have thought that every time there was a notification the lender was going to agree with the borrower that it was appropriate congress must have got them there that they were going to be some cases where the lend and the borrower disagreed and yet congress didn't say anything about how those cases would be resolved and that's a puzzling feature of the statute it is a puzzling feature justice kagan i i can't deny that but i can say that congress revisited the language of the statute four times after its initial an act in one nine hundred seventy four and one nine hundred eighty in ninety ninety five and ten and it never changed the mechanism of rescission that it set forth in the original provision of sixteen thirty five information in forms required under this section is also a mirror to what had been put forth in an essay where it provides that there are disclosures in forms that are going to be promulgated under the regulations so in that regard i think what congress was trying to get at was to keep the process simple if there was going to be litigation asiri invariably has courts would be able to sort that out using what they added in one nine hundred eighty which is the last sentence of subsection b which is to give the court some cases the way i read them is that these are like mini bankruptcy proceedings the where the where the lender and the bar were going into court and they're they're making arguments about the propriety of the rescission they're making arguments about how much is owed they're making arguments about what claims need to go back and forth and that the court ultimately is making a decision that tallies out based on the loan proceeds and all the back and for he's going to know what to whom mr frederick  on agreeing with the proposition that the rescission is completed at the time the notice is said i think it know it but it does depend on accepting the idea that rescission is just cancellation and then if restitution occurs which all the the procedures those are going to happen after the cancellation if i could save the balance of my time for a bottle thank you coun forms that the lender is required to give the borrower aren't given and that three day window essentially marches forward in time all the way up to the three year mark what section sixteen thirty five f does is put a backstop on how far that three day window can proceed  and point on the exercise of the right of rescission through a written notice but nothing in section sixteen thirty five refers to bringing an action in court to a cause of action to any of the language that one would expect to find in the statute o while berger defined a statute or propose something that puts an outer limit on the time for bringing an action running from the date of the defendant's last culpable act or a mission and that's not what section six hundred thirty five does it doesn't have any language to that effect respondents position would actually create an anomaly that's not seen under statutes of limitations or statutes of repose and that would be that in some circumstances they would require the borrower to file a suit before the violation that the bar  complaining about had even taken place and that would be in a situation in which the borrower is sending the new dissever cision say a few days before the three year period runs at that point the lender has twenty days to respond and to say whether it's going to accept the notice of rescission as valid and whether it's going to voluntarily comply with the unwinding procedures in section six hundred thirty five b the kind of suit that a bar would bring in that circumstance would be complaining about a violation of section six hundred thirty five b that the lender refused to  at that point i think the lender is making it would have to make a judgment in this case and in other cases about whether thinks the notice is valid if the lender guesses wrong then it may be that it will subsequently be held liable for damages for guessing incorrectly and for failing to follow the unwinding procedures under section six hundred thirty five b when it should have done so but that kind of retrospective determination is extremely common in commercial arenas and commercial actors have to make decisions like that all the time an insurance company that gets a claim from its insured saying i've been injured and i'm telling you within a certain amount of period after the accident a certain time period after the accident that i've been injured please pay me that insurance company might pay or it might not pay and if it's wrong  we didn't get two copies you look at your file if you still have the file and you have a document where they acknowledge that they got two copies so when you do you take your chances on what the speed jury question down the road whether you believe that they actually did get the second copy or whether they believe your documentation i think what you would do would depend on the circumstances or the circumstances so i don't think you're going to know a lot more than that what would you do in that  tance i would certainly start by going to the bar and trying to work it out privately which is i think what congress primarily intended when it set up the scheme if i were able to do that it would depend i think on whether i thought that the prospects the notice of rescission could someday  e enforced down the line the borrower could go to a court and say please recognize that i validly exercise my right of or send directress in and give me the entitlements that flow from that it would depend on what i wanted to do if i wanted to foreclose for instance on the property and i needed my security interest to be absolutely rock solid in order to do that then i might bring it declaratory judgment action or i might in the context of the foreclosure ask the court to declare that the rescission was invalid what section section sixteen thirty five f it gives the lender the power to eliminate any uncertainty if it feels the need to do so in a particular case the first section six hundred thirty five existed the the borrower could rescind basically you know indefinitely you could pop up years later and rescind and the lender couldn't file a lawsuit before that because there would be no diversity between the parties that could just file a lawsuit saying please declare that there can't be rescission what section sixteen thirty five f does is it creates adversity essentially the lender down knows that the borrower has exercised the right to a sinner believes that it's done so badly and now there's a diversity between the parties and if the lender needs to it's now in a position to bring it to quote or a judgment action or some other kind of claim to make the uncertainty go away so the answer in t is think you can get that directly out of the statute and i'm now looking at the same provision i was referring to before section six hundred thirty five b says in its first sentence when an exercise is his right to rescind under subsection a then the security interest becomes a void upon would get at common law as i say i think response position has a number of anomalies associated with it and it is not consistent with the purposes of t r was enacted to make things simpler and clearer for b harbor if they use so there is no where any explanation to the borrowers that they have to file suit within this period of time to exercise their rights and that's very hard to reconcile what congress is getting out and also to the extent that there's any doubt about the interpretation of these provisions we do think that deference to the agency is warranted both with respect to the regulation which was adopted as a result of notice and comment we're making that's an interpretation of the statute that makes a judgment  exercised the same way in every contracts whether it's in the first three days or at the end of the three year period and we think that's until the chevron deference and if there are any doubt about that we think the agency's interpretation of the regulation itself intitled to difference for how and by when that should be done on section sixteen thirty five she provides for and a world of rescission and section sixteen thirty five i'm sorry these are all on  g is on page four of the appendix to the blue brief in agreement with what i think i understand my friend from the government to just say if eight notice of intent to rescind under a is sent in a timely fashion that is within the three day window was noticed is untimely and that the notice that's provided at closing tells you the periods of time in which it is timely it doesn't do anything and after three days that is within three days of the the question of whether it's timely or not depends upon whether the lender violated to you at the closing and where the lender says as happened here i am holding your signed acknowledgement that you received these forms very position the plaintiffs position depends on and a construction of the statute that says even if once that notice is sent even if it is completely the security interest is vitiated the borrower the lender is required to return all monies paid you know except in an instance i suppose this is not textual and which bank  and tries to get a t r o and that's not the position the government has if let's assume that the notice of recession is baseless the documents were received the petitioners as i understand it can say the bank can say so what you will with money we're doing nothing we're not giving you money back and they're in the bank try to protect it well if that is our position and when my friend mr frederick says you know we've never found any case of a windfall under be the answer isn't because in a in an amendment in one thousand nine hundred ninety five congress said that in the last sentence of b that a court can modify this it's that everybody understands that unless and until well when you take your chances and if the bank if you're in the bank and you're wrong the oath ultimately the bar is going to get damages to set for that's correct and what it should do is you don't get the right to recession you don't get a recession just that that is not our position and i don't think the other side has ever cited a case in which we can we can debate whether this is called a statute of repose but let's just accept what this court said in beach which is after three years the substantive right for which the remedy of rescission is available expires when no no no i mean that justice ginsburg i don't think anybody is is disagreeing that everything that the court said and beach was not that we were each reliant on is dicta because there was no notice but the point my point here is that the underlying right disappears after three years and the question is right is that a right to it is a right to rescission and what happens in an instance where the lender says your notice is either on timely or invalid for another reason is the borrower hast to has three years in to take some action to retain and a would have rescission which is exactly the remedy that congress specifies in sixteen thirty five g and which is referred back to in sixteen forty eight three and sixteen forty see which is you can accomplish rescission that is and rescission is at common law and common understanding the return of the parties to and there's nobody is arguing that congress didn't tinker with the common law procedure either in law or equity the point that i'm trying to make here is congress said in gee relief that i think it would be very odd if that's where congress decided to place the provision that tells you what happened what happens when there's an exercise of the right to respond well mr chief justice i think one needs to understand the context in which that provision was enacted there was always an understanding from the start and effect the understanding as reflected in subsection c which is establishes a presumption that the required forms were delivered a presumption that can only apply in a judicial proceeding everybody understood that in many many cases in which the notice was sent after beyond three days after consummation that there would where it might be a bankruptcy proceeding in which the question of rescission was going to come up and which it was going to be adjudicated and all of the g says is that in those cases the court can award not on rescission but damages but that's hard dispute resolution provision justice kagan v g was intended and we know this very clearly and i think it's pretty obvious from the language what had happened in choice of filing a suit for damages under sixteen forty which has a one year statute of limitations or pursuing a an act in an action film rescission for a quirk award of rescission and what was happening that precipitated geed was that clutch rule requiring the borrowers to elect remedies and what she says is no no no if you are suing for an award of rescission you can also get relief under sixteen forty and similarly they amended sixteen forty eight three which involves a suit for damages to say that if it is a request for an award of rescission and you prevail you get attorney's fees but every provision in here that talks about a suit for recision says just that it's not a suit by the borrower for restitution of a rescission that has already occurred it's not a suit for a a completely an exceptional widespread understanding at the common war now justice ginsburg i'm not suggesting the congress didn't temper with procedures under the common law but this court has warned again and again that congress is not presume to advocate common law principles and congress when it does so has to speak directly so in this instance for example hasn't spoken to ripley when it return the money in the other side has to give the property to stoke an orderly clearly about all of those things and it is also said what happens in the mining run of these late notification cases that i mean between three days  three years of the consummation of the transaction that if the borrow f a lender says your notice is invalid no rescission at by any definition rescission has not taken place and the bar was recourse is  our i don't know what the government's position is on that but i know what our position is which is if the before a lender receives the notice and says this is timely subsection be very specifically you know with respect to the common law explains the steps that have to occur to achieve rescission there's no question about that whatsoever but those steps the no court has held with the i mean another typical instance in these cases and by the way when i take it they do have to occur and they're going to be damages at least let's let's assume a valid notice of rescission two and a half years down the line if the bank has the choice there is a recession there is a risk that i think there are two very different things here that addressed in sixteen thirty five g and sixteen forty and this court's decision in beach underscores just exactly how much those two things are different eight bar up well i can generalize it by saying any party to a contract in this case it's the borrower to a refinancing set and anybody can say hey you're not performing under the contract and i want to i want to file a suit to require you to perform which is the ordinary contract remedy or give me damages for not having performed which is what is in sixteen forty a a suit for damages for not having for having violated teela who are at common law and under this statute there can be a suit for a very different much more direct kone and remedy which is a s rescission and a suit full rescission is what this lawsuit is about the the the question in this case is what must a borrower do to obtain resolution of a contest assertion of rescission and by when must it do it and the amazing thing is that my friends on the other side say the statute is silent about that point we say no it's not the statute provides for maybe not as directly and as insufficient in a clear exposition in ga as one would have hoped to avoid all this litigation but nonetheless a g has been construed and construed by congress in sixteen forty eight three as providing the borrower eight cause of action for an award of rescission and in a situation where but you know the last of the bar where the lender says no we're not rescinding decision by any definition has not occurred and the lawsuit is about whether about the recession occurring or not it talks about the exercise of a right yes and the exercise of the raw meat doesn't mean that the act will have come up out of you or you will answer me earlier that a court doesn't have to finish within the three years you just want to say that it requires the exercise to be a court action but the statute says something else is just notification not says the time i mean it doesn't the following what the right of rescission is it's what it says is this these are the circumstances in which the bar work has the right to rescind in those circumstances are if within three days you send a notice of intention to rescind you have exercised your right or right to rescind and what that means is as it was a common law you have put to your counterparty and intention to or unwind the exercise of the right is when you said the notice not but that but the problem no no let me be mistaken here this is not a question about how you exercise your right to rescind everyone agrees that you exercise eyes rule right to rescind that is to initiate the on winding process that constitutes rescission by sending a timely and valid notice sending that notice does not accomplish and the question and the question in question is whether that's the exercise of the right within three years and the answer is no because where the but where the lender says i'm not i don't agree and we are not going to is that a person who borrowed some money arms money now he can tell the lender i changed my mind when well within three days or by notifying the creditor it's is their right to receive and by notifying the credit i mean ok go ahead i'm just be expressing my you see the problem i have read the words and it seems to me it's process what constitutes rescission there is no dispute among any party that when a valid timely notice is filed that triggers the rescission it triggers the re process but there is also no dispute as misquoted burke said that a borrower's notice doesn't do anything unless the notice was timely and otherwise valid and after three days and disagree again there is a right of action in g and referenced in a three four and a would of rescission no lender is suing ford award of rescission and as to the three day period let me just say a couple does not occur until there's the exchange that the common law yes and corella to flee the fact that an untimely or otherwise invalid notice doesn't do anything when you can no longer exercise your right to rescind what you've just said is when you can send notice that that's what expires after three years your ability to send notice no i think it's not what it was says right there it's the right to operation of half dot only it is not only to put a cut off for the last state in which you can send a notice but it quote operates to a stick stick pushed the right which is the foundation for the claim and therefore it necessarily equal limits the time for bringing suit by governing the wife of the underlying right and so in a circumstance in which a notice is sent which is a notice of intent to rescind under if the bar if the lender says you're right and this is the common instances within the three day of closing which i'd like to address the statute says here's how you on why did you go through the procedures and b if the bar if the lender says no that's not a valid right it's not timely the bar of the statute gives the borrower not only a cause of action for damages under sixty forty but a cause of action for an award o our position now as to this three day point if you say the rescission doesn't your the right to rescission has to be expires after three years but we do know if he has a recent right to rescind the lawsuits actually terminated knows how are we any more how are we any more in the enlightened than the day before he filed the lawsuit just as justice prior no one is contending in this case in this case that a statute of repose that is saying why pick the date the defiler lawsuit in terms of the validity of the note because the filing of the lawsuit will more determines the validity of the notice than it was determined three days before because six because sixteen thirty five f refers to the ob the gooders right of rescission and where the ob the brewer has not obtained the decision that he or she claims he has a right to he can go to court for in a world of rescission and the statute tells him you have to have a live underlying writer for cision before you invoke the court's jurisdiction to do it which is exactly what happened at the common law in these circumstances now i just want to say that i think you know the other side says well we're making a big distinction between whether the notice is sent within three days or after because somehow nobody could believe that a lawsuit would be filed within three days sixteen thirty five a doesn't govern when a lawsuit is filed it governs when the notice of intention to rescind has to be sent if there is a dispute about whether that notice is timely or whether it's otherwise valid for example it's often invoked in cases where there is a refinancing with your original lender which this doesn't apply to or a purchase money mortgage where this doesn't apply to if there is a dispute about it let's say the i think this is happened so far as we've all been able to determine one time in history where it comes certainly comes within three days of closing and the lender says no no that's four days you're too late we're now away what congress in the boord understood is that within the three day period that is the period that in this barlow friendly statute where congress was concerned about borrowers being hoodwinked in high pressure loans the statute gives the borrower an absolute right for any reason or no reason within three business days to say you know i've gone back and i've looked at the disclosures and i've changed my mind what about the board you mention the board you're going to say anything about i there's nothing to say in case the boards the blood's regulations which are now the bureau's regulations speak to how one you know what kind of notice is really notice and the exercise of the notice of intent to rescind it says nothing about what's at issue in this case which is why the lender disputes that the notice is valid what and by when does the borrower have to do now the bluer the the bureau has asserted the their reading is completely inconsistent with the common law inconsistent with the statute that is the provisions of cheney and af and in any event nobody is claiming that the bureau has any expertise about this aspect of teal and this isn't the mind run of cases where you know what does what does excessive interest for adequate notice me now i think it's important to understand that within with what congress understood was it was providing borrowers a three day period and in that three day period rescission is pretty uncomplicated because the the the brute and the bureau in the regulation that's at issue in this case says to the lender you may not you may not disperse the loan proceeds to the bar or on your i think your security interest you may not do it during the quote rescission eery period and for such time thereafter until you are satisfied that no rescission will occur that is the words and the bureau's directive now what happens in this case in a case like this is but transaction the security interest has been recorded a lot of money has been dispensed and the question is at that point whether the borrower will by rescinding be able to obtain an essentially an interest free loan for whatever that period of time is the bank of america alone receives between food and six thousand of these after three year notices every year and the number has increased every single year since they started reporting this the notion that the what congress had in mind is that the lender who thinks that the notice is invalid and in most instances the  borrowers in default has to run in no matter how frivolous this complaint is and file what would be among all lenders tens of thousands of lawsuits a year have to do anything that any go to foreclose the only time that it's a problem is when the borrower is not paying the loan put in most of these the borrower stops paying the loan in both foremost foreclosure first of all foreclosures may or may not occur depending on whether the bank wants it and many many if not most foreclosures are nontraditional so there's no judicial proceeding and a sale at foreclosure will buy everybody's understanding vitiate the underlying right thank you thank you council for minutes mr frederick thank you mr chief justice i think if the court were to accept the bank's position here the truth in lending act would become even more complicated because the rules of the route or the statute or pretty clear that if within three years you've exercised the right by sending the notice that starts the process ensure the bank can contest it but at least you know by reading the statute that you've got three years and we're going to exercise that right and the reason why that why it is important is that these disclosure can be very complicated in these transactions can be very complicated so if you don't get the disclosures within the three day period of the closing of the loan you can go into the loan and you can determine this is very complicated i'm now see my rate increase i'm seeing my payment increase and i don't really understand all these various things now the point about you were the reason why the disclosures are important the reason why the number of the disclosures is important is really clear actually look at the disclosure in this case it's a cheek to an appendix page thirty eight it says right to cancel all over if you want to write the cancel you can cancel it if you do certain things it never says file a lawsuit so the from on that the bank used here didn't you know preserve its argument that the statute requires filing a lawsuit it just says you have send this notification of your intent to cancel your importantly in this question came up i'm sorry why are two of these i mean some of the reaction of these lawsuits is premised on the one opposed to two copies that seems rather immaterial whether you get one or two got it and let me explain that keep it in their file and there is no dispute at that point that everybody is operating by the same rules of the road why are fewer necessary for we know from the financial crisis and common sense that when two people are on a loan together they might not agree when the rubber meets the road and the rate resets or the payment increases or all these other things and they may decide i have an individual right to rescind that's given by statute and by the original regulations of regulations e so here if i don't have my forms i can exercise my statutory right and that's why from the very beginning the fed said each bar work gets two forms so that everybody knew what the rules work and everybody knew how to exercise them and everybody was on the same page and so although it is true be sure to be fear this is not the kind of disclosure violation that would entail an interest rate change or of the change in a payment or something like that the same principle applies for whether or not the bar worse timely rulings if you know i don't sign to loans and i don't know how many years to homes but i thought at closing i sign something acknowledging yes and let me bank kept one and presumably it gave me another so those were the two look ok and no it's actually you get two and if i could actually i read i don't remember saw it sending it back to the bank saying no it's because you probably want to make one point there's a confusion here on this particular form because the the what this says what it says is the undersigned each acknowledge receipt of two copies it doesn't say the undersigned each acknowledge each receiving two copies and so you can understand why there is confusion about these kinds of disclosures i'll just point out that over the last years during the financial crisis home loan originators have gotten into a lot of trouble and within the last few months this bank five paid five billion dollars for its shoddy loan origination practices it is not a surprise why we're here it is not a surprise why is mr waxman says they get a lot of these notifications because they were trying out one so so fast they wanted people to get loans under personally any circumstances so they could then peddle that to the world to wall street bankers who would then sell them to unsuspecting investors got the last thing i want to say with respect to g is that it doesn't say exactly what he's saying there is no sutra rescission in she what it says is that in addition to rescission which you could read is in addition to the self help remedy of the exercise