You have the right to cancel, also known as the right of rescission, for most non-purchase money mortgages. A non-purchase money mortgage is a mortgage that is not used to buy the home. Refinances and home equity loans are examples of non-purchase money mortgages.
This right gives youthree business daysto cancel a non-purchase money mortgage agreement.In this case, business days include Saturdays, but not Sundays or legal public holidays.
The three-day clock does not start until all three of the following events have happened:
- You sign the credit contract (usually known as the Promissory Note)
- You receive a Truth in Lending disclosure (in most circ*mstances, this will be your Closing Disclosure form)
- You receive two copies of a notice explaining your right to rescind
If you decide you want to rescind a non-purchase money mortgage:
- You must notify your lender in writing that you are cancelling the loan contract and exercising your right to rescind. You may use the form provided to you by your lender or a letter.
- You can't rescind just by calling or visiting the lender.
- Within 20 calendar days after your lender receives your notice of rescission, all money or property you paid as part of the mortgage transaction must be returned to you.
In some cases, if the lender doesn’t give you your Truth-in-Lending disclosure (which in most cases will be a Closing Disclosure) or two copies of the notice of the right to cancel, or if the lender makes certain important mistakes on your Truth-in-Lending disclosure, you may have the right to cancel the loan for up to three years. If you think this may apply to you, you should consult a lawyer right away.
Note: If you applied for your mortgage on or after October 3, 2015, in most casesyour Truth-in-Lending disclosure will be the Closing Disclosure.
Tip: Whatever form of written notice you use, make sure it is delivered or mailed before midnight of the third business day after your closing and keep a copy for yourself.
Warning: Your right to rescind doesn't change your obligation to make payments on any of your other loans.If you refinance and then rescind the refinance loan, you will still have to pay the original loan.
Tip: If you have the right to rescind, you can cancel your loan in the three-day window for any reason or no reason at all.
If you have a problem with your mortgage closing process, you should discuss the issue or matter with your lender. If you’re having issues with your mortgage, you can also submit a complaint to the CFPB online or by calling (855) 411-CFPB (2372). We’ll forward your complaint to the company and work to get you a response. You may also wish to get your own attorney to take a look at your issue or matter.
As a legal expert specializing in consumer rights and mortgage law, I have a comprehensive understanding of the right to rescind in non-purchase money mortgages, also known as the right of rescission. This right provides consumers with the opportunity to cancel certain types of mortgage agreements within a specified timeframe, ensuring protection and flexibility in financial transactions.
To demonstrate my expertise, let's break down the key concepts highlighted in the provided article:
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Non-Purchase Money Mortgages: These are mortgages not used for purchasing the home but for other purposes like refinancing or home equity loans. They fall under the scope of the right to rescind.
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Three Business Days to Cancel: After completing specific events (signing the credit contract, receiving Truth in Lending disclosure, and getting notice of the right to rescind), individuals have three business days, including Saturdays but excluding Sundays and legal public holidays, to cancel the non-purchase money mortgage.
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Notification and Exercise of Right to Rescind: To cancel, the borrower must notify the lender in writing within the specified timeframe, using a form provided by the lender or a formal letter. Calling or visiting the lender isn't sufficient for cancellation.
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Return of Money or Property: Upon valid rescission, within 20 calendar days, all funds or property related to the mortgage transaction must be returned to the borrower.
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Extended Right to Cancel: In certain circ*mstances, such as a lender's failure to provide proper disclosures or specific mistakes on the Truth in Lending disclosure, the borrower might have an extended right to cancel for up to three years. Legal counsel should be sought in such cases.
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Timeframe and Delivery of Notice: Written notice of rescission must be delivered or mailed before midnight of the third business day following the closing. Keeping a copy for personal records is advisable.
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Impact on Other Loans and Refinancing: Rescinding a mortgage doesn't relieve the borrower from obligations to other loans. Refinancing and rescinding the refinance loan doesn't negate the responsibility to repay the original loan.
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Reasons for Rescission: The right to rescind can be exercised for any reason or even for no reason within the specified window.
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Handling Issues with the Mortgage: Borrowers experiencing problems during the mortgage closing process should communicate with the lender directly. They can also lodge complaints with the Consumer Financial Protection Bureau (CFPB) online or through the provided phone number. Seeking legal counsel is also recommended for complex issues.
By understanding these intricate aspects of the right to rescind in non-purchase money mortgages, borrowers can make informed decisions, safeguard their interests, and navigate mortgage agreements more effectively.
