What is a right of rescission?

What is a right of rescission?

What is a Right of Rescission. The right of rescission is a right, set forth by the Truth in Lending Act (TILA) under U.S. federal law, of a borrower to cancel a home equity loan or line of credit with a new lender, or to cancel a refinance transaction done with another lender other than the current mortgagee, within three days of closing.

What is the 3 day right of rescission rule?

Federal law requires that consumers refinancing first mortgages or obtaining second mortgages have three days to cancel these loans after they sign their final loan documents. Here’s what you need to know about this “three day right of rescission” rule. Background on Right to Cancel Rule.

Is there a 3 day right to cancel a purchase loan?

The three day right to cancel is only for refinances or home equity loans, and doesn’t apply for home purchase loans. That said, new settlement procedure laws effective October 3, 2015 provide significant protections to consumers throughout the entire purchase loan process. Read more about the new rules.

How to get out of a mortgage with the 3-day right of rescission?

If you’re wondering how to get out of a mortgage, the three-day right of rescission could help you in some circumstances. To rescind something means to take it back or cancel it. Rescission is an act of rescinding. You can rescind an invitation to your birthday party.