Home  |    


Recision period

With Non-owner occupied homes there is no recision period.

You must exercise the right of rescission within three business days of signing the loan papers, receiving all the loan disclosures, and getting a copy of the notice that there is a right of rescission.

Be sure to check with your title company or settlement agent at your closing to determine when your recission period ends, because no funds will be disbursed prior to the end of the recission period. This can affect paying off your previous mortgage as well as any other debts consolidated into the new mortgage.

In certain states, such as Texas, recission may be for a longer or shorter period of time. Your loanofficer can help you answer this question for your state.

The Right of Recision lasts for a period of 3 complete business days after you sign your loan contract. The Right of Recision applies only to refinance transactions on a property that is used as the borrower's primary residence. The Right does not apply on a purchase transaction or property that is being used for investment or a second home. Also, the borrower may not waive his Right of Recision.

Accordingly, the lender will normally not fund any loan until the Recision period has expired.

Recision means the ability to cancel the contract. In relation to mortgage refinancing, the law gives the homeowner 3 days to cancel a contract once it is signed and if the transaction used equity in the home as security.

The Right of Rescission is a federal law granted in the Truth-in-Lending to the mortgagors. It is meant to give the borrower a "cool off" period and to review the mortgage documents. In a refinance, funding takes place after the 3-day rescission period.

There is no Right of Rescission on primary residence purchase loans.

This period of time starts from midnight of the day of closing and goes until midnight 72 hours out. This means if you close on Monday the loan will not fund until Friday.

When trying to figure out when your loan will fund, or when your recission period is over you will count the 3 days beginning the day after closing. Monday-Saturday are all included as a recission day however Sundays are not. Also legal holidays are not counted as rescission days.

The recision period is a federal right. You have 72 hours. However some lenders have decided to increase the recision time. This is often done after getting the hand slapped for unfair lending practices. There are lenders now that will give you a 7 day recision period. If a lender is offering you 7 days to recind, read your HUD 1 carefully for loan charges etc...

With most lenders, Saturdays count as one of your rescission days, but Sunday does not.

Keep in mind that typically there is no "re-negotiation" of the loan with the lender once they receive your notice of rescission.

That being said, if its pricing or terms that you're uncomfortable with, try contacting your broker before rescinding, and attempt negotiating with them instead. Most lenders would prefer finding a reasonable middle ground then losing your business all together.

That being said, if your reason is due to gross negligence or suspected unethical lending practice, you should fax the notice right away and without warning.

Rescission is a right that lets you back out of a loan. In an owner occupied home with a home equity loan or refinance you have a right of rescission. The right of rescission lasts for three days and can be exercised for any reason.

DISCLAIMER: The information contained in this article on 'Recision period' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.

Recision period

Article Menu:


Article Contributors:

TNB Financial Group
Virginia Hard Money
_ Conduit Loans
Conforming Rate
For Bad Credit Loans
First Time Homebuyer

Related Topics:


Copyright 2007 Broker Outpost LLC, All Rights Reserved. Privacy Policy | Cookie Policy | Terms of use | Financial Disclaimer