Mortgage Rescission and the Right to Rescind

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If a borrower exercises their right to rescind, what is actually rescinded?


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When a borrower rescinds a loan, the borrower is declaring that the loan documents that were signed are null and void and cancelling the loan request that was originally made.

Rescission is a protective measure to permit borrowers a chance to re-think their decision to pledge their home as collateral. It is afforded to borrowers who have already signed the closing documents and left the closing table.

The borrower has a right to rescind only in the case of a refinance transaction that is secured by a mortgage on the borrower’s primary residence.

The right to rescind document is presented at the closing table and sets forth the guidelines by which the borrower can cancel the transaction. The key element to rescission is that the borrower must do so within 3 business days. Saturdays do count, Sundays and national holidays do not. The right to rescind document will show the specific time and date by which the borrower must give notice. Look or ask to see the phrase, “By midnight of …”.

If and when a borrower does want to rescind, it should be done in writing but also confirmed via telephone with the closing agent, the person or company that witnessed the borrowers signatures on the note and mortgage.

And when rescinded, the loan request is considered closed. The borrower can make a new request for credit, with the same lender or any other lender, but any and all documents gathered per this rescinded request are null and void.

Answered over 6 years ago

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