The Supreme Court on Tuesday agreed to hear a Truth-in- Lending case.

At issue in Beach v. Ocwen Federal Bank is whether a borrower facing foreclosure may allege Truth-in-Lending violations after the three-year statute of limitations for raising such claims has expired.

The lower courts are split. In New York and Illinois, borrowers have been allowed to raise Truth-in-Lending claims as a defense in foreclosure cases even if the statute of limitations has expired. However, other courts, including the Florida Supreme Court in this case, have barred all claims after three years.

Truth-in-Lending allows borrowers to void the loan and recover all the interest paid if the lender miscalculated the annual percentage rate or failed to disclose all of the fees.

"This is a good area to get some clarification in," said Nessa E. Feddis, senior federal counsel at the American Bankers Association.

"There have been varying interpretations of the law."

Arguments are not expected until early next year. A decision is likely in May or June.

Also on Tuesday, the justices rejected a case questioning the Federal Deposit Insurance Corp.'s ability to void oral contracts made by banks that subsequently fail.

The case, Young v. FDIC, involved the disputed D'Oench Duhme legal doctrine, which the agency uses to protect the insurance funds from ailing institutions that make unwritten deals with borrowers or vendors.

In refusing to take the case, the Supreme Court passed up an opportunity to resolve conflicting rulings issued recently by lower courts. George H. McMaster, a Columbia, S.C., lawyer who filed the appeal on behalf of Robert H. Young of Dallas, called the rejection a "crushing defeat."

"It leaves us with a clear split of authority across the nation," he said.

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