A borrower refinances their home on Monday and receives proper TILA disclosures. On Wednesday, they decide to rescind but realize they need the loan proceeds to pay off credit cards due Thursday. What happens if they rescind?
Correct Answer
C) They can rescind and have 20 days to return loan proceeds after the lender returns their payments
Under TILA Section 125(b), when a borrower rescinds, they have 20 days after the creditor takes the required rescission actions (returning money and releasing the security interest) to tender back any loan proceeds. The borrower's financial situation doesn't affect their rescission rights.
Why This Is the Correct Answer
Under TILA Section 125(b), when a borrower rescinds, they have 20 days after the creditor takes the required rescission actions (returning money and releasing the security interest) to tender back any loan proceeds. The borrower's financial situation doesn't affect their rescission rights.
More Federal Laws Questions
A mortgage broker's website states 'Qualified borrowers can get loans with down payments as low as 3%.' Which statement about TILA advertising requirements is correct?
A loan's APR increases from 4.25% on the Loan Estimate to 4.35% on the Closing Disclosure due to a rate lock expiration. What action is required?
A lender originates a mortgage that meets all QM requirements. Three years later, the borrower defaults and claims the lender violated the ATR rule. What legal protection does the lender have?
For a closed-end mortgage loan, when must the creditor provide the Closing Disclosure to the borrower?
Which of the following documents must be provided to trigger the start of the 3-day rescission period?
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