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Borrower Must Return Cash to Rescind Reverse Mortgage, Court Says

July 14, 2022, 6:52 PM

A borrower must return the proceeds of a reverse mortgage in order to rescind the loan, the US Court of Appeals for the Fourth Circuit ruled Thursday.

A three-judge panel found that a borrower has three years to rescind a reverse mortgage if the mortgage company fails to provide disclosures mandated by the Truth in Lending Act. But the borrower is required to return the proceeds of the reverse mortgage in order for the rescission to be complete.

“To decide otherwise would bestow a remarkable windfall on a borrower and penalty on the lender divorced from the text of TILA ...