Right of Rescission
A right under federal law set forth by the Truth in Lending Act that gives a borrower the right 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. The right is provided on a no-questions-asked basis, and the lender must give up its claim to the property and refund all fees within 20 days of exercising of the right of rescission. Investopedia Says:
The right of rescission was created to protect consumers from unscrupulous lenders, and to give borrowers a cooling off period and the time to change their minds. Not all mortgage transactions have the right of rescission. The right of rescission exists only on home-equity loans, home-equity lines of credit and refinances of existing mortgages in which the refinancing is done with a lender other than the current mortgagee. The right of rescission does not exist on a mortgage for the purchase of a home, a refinance transaction with the existing lender, a state agency mortgage, and a mortgage on a second home or investment property. Related Terms:
Closing Costs
Home-Equity Line of Credit - HELOC
Home-Equity Loan
Mortgage Banker
Mortgage Broker
Refinance |