Right of Rescission

The right of rescission is a privilege granted to borrowers under the Truth in Lending Act (TILA) under U.S. federal law to cancel a loan transaction with a lender other than the present mortgagee within three days of closing. The right is granted without any questions asked, and the lender must relinquish its claim to the property and return all expenses within 20 days after invoking the right of rescission. The right to rescission applies solely to mortgage refinancing. It is inapplicable to the acquisition of a new home. Suppose a borrower wishes to cancel a loan. In that case, they must do so by midnight on the third day following the completion of the refinancing after receiving a statutory Truth in Lending statement from the lender.