Believe it or not under the Truth in Lending Act it is possible to rescind a loan even though you paid it in full. This is the law in most places, except — get this– the Ninth Circuit (which covers the many Western states including California)! Just last week another district court in the Ninth Circuit refused to allow rescission of a loan which had already been refinanced. In Larson v. Argent Mortgage Company, 2010 U.S. District LEXIS 8557 (W.D. Washington), Cheye Larson made unspecified claims of TILA disclosure violations in connection with the mortgage loan he had with Argent and sought rescission. Argent said not so fast. It argued that its loan had already been repaid and that there was nothing to rescind. The court agreed relying on King v. State of California, 784 F.2d 910(9th Cir. 1986).
This most recent line of cases is interesting to practitioners because the Ninth Circuit is generally viewed as the most consumer friendly of all the circuits. In this case it is tougher than every other circuit that has considered this issue. See Barrett v. JP Morgan Chase Bank, 445 F.3d 874 (6th Cir. 2006);Handy v. Anchor Mortg. Corp., 464 F.3d 760(7th Cir. 2006) and a host of district court cases.