(Adds details of ruling and case, paragraphs 4-8)
By Lawrence Hurley
WASHINGTON, Jan 13 (Reuters) - The U.S. Supreme Court on Tuesday ruled in favor of homeowners seeking to back out of mortgages when lenders are accused of failing to follow a federal "truth in lending" law.
On a 9-0 vote, the court handed a win to an Eagan, Minnesota couple, Larry and Cheryle Jesinoski, over the $611,000 loan they obtained in 2007 from Countrywide Home Loans Inc, now part of Bank of America Corp.
On the technical question before the justices, the court said homeowners need only write a letter to the lender, as the Jesinoskis did, and do not need to file a lawsuit in order to benefit from a provision of a federal law known as the Truth in Lending Act.
The law allows consumers to rescind a mortgage for up to three years after it was made if the lender does not notify them of various details about the loan including finance charges and interest rates. The Jesinoskis filed their notice right before the end of the three-year period and filed a lawsuit a year later after the bank said it was disputing the claim.
The language of the law "leaves no doubt that rescission is effected when the borrower notifies the creditor of his intention to rescind," Justice Antonin Scalia wrote on behalf of the court.
The provision is typically used by homeowners who are struggling to pay their mortgages. Lawyers for consumers say mortgage companies routinely violated the law in the years prior to the 2008 financial crisis. Lenders contend that notice is not enough if the bank in question disputes the homeowners' claim.
Appeals courts had been split over what homeowners have to do to trigger this rescission process. The Jesinoskis appealed a lower-court decision that favored Countrywide. The Supreme Court reversed that lower-court ruling.
The case is Jesinoski v. Countrywide, U.S. Supreme Court, No. 13-684 (Reporting by Lawrence Hurley; Editing by Will Dunham)