A borrower's refinance loan documents contain an error in the Notice of Right to Cancel form showing the wrong rescission deadline date. The form shows the deadline as Thursday when it should be Friday. What is the effect?
Correct Answer
B) The rescission period extends to 3 years due to the material error
Under TILA Section 125(f), if the Notice of Right to Cancel contains a material error regarding the rescission period, it's considered a failure to properly deliver the notice. This triggers the extended 3-year rescission period. An incorrect deadline date is considered a material error that affects the borrower's understanding of their rights.
Why This Is the Correct Answer
Under TILA Section 125(f), if the Notice of Right to Cancel contains a material error regarding the rescission period, it's considered a failure to properly deliver the notice. This triggers the extended 3-year rescission period. An incorrect deadline date is considered a material error that affects the borrower's understanding of their 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?
People Also Study
General Mortgage Knowledge
23% of exam
Mortgage Loan Origination Activities
25% of exam
Ethics, Fraud & Consumer Protection
17% of exam
Uniform State Test Content
12% of exam
Previous Question
Two mortgage companies create a joint venture to provide settlement services, with each company owning 50% and referring their borrowers to the joint venture. To comply with RESPA Section 8 AfBA requirements:
Next Question
A lender's print advertisement includes the statement 'Closing costs as low as $2,500.' Under TILA advertising requirements, this statement: