Right of Rescission Expiration


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  • #6919

    If a loan and all closing documents were dated 4/6/15, but the borrower did not sign the disclosures until the day after the note was dated would this cause Rescission to be extended 3 years? Funds were not disbursed too soon, but the borrower was informant of an incorrect expiration date.


    If I understand you correctly, I believe you are saying the loan was consummated on 4/6 (meaning closing disclosures and note delivered/signed) but the rescission notice wasn’t delivered until the following day. If this is the case and you allowed the consumer three business to rescind before providing the funds then you should be fine. (If the circumstances are different let us know.)

    Reg Z 1026.23 (Rescission Closed-End Rules):

    The consumer may exercise the right to rescind until midnight of the third business day following consummation, delivery of the notice required by paragraph (b) of this section, or delivery of all material disclosures, whichever occurs last. If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation, upon transfer of all of the consumer’s interest in the property, or upon sale of the property, whichever occurs first. In the case of certain administrative proceedings, the rescission period shall be extended in accordance with section 125(f) of the Act.

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