A closed-end home equity loan subject to Regulation Z rescission was consummated June 12, 2023. The creditor never supplied the required rescission notice. The consumer has neither sold the property nor transferred all ownership interests, and no special administrative extension applies. As of February 4, 2026, what is the status of the unexercised right?
Correct Answer
D) It remains unexpired on that date, subject to the ordinary three-year outside limit and earlier sale or full-transfer rules
D. The right remains unexpired on February 4, 2026 under these facts. The missing required notice prevents the ordinary three-business-day clock from starting. The third anniversary is June 12, 2026, and the question excludes earlier terminating events. Scope and exceptions: Contacting a lawyer alone is not written rescission notice to the creditor. This question tests whether the right is unexpired, not whether it has been exercised or the outcome of a disputed claim. Source: Section 1026.23(a)(2)–(3); comment 23(a)(3)-3 — https://www.consumerfinance.gov/rules-policy/regulations/1026/23/
Why This Is the Correct Answer
D. The right remains unexpired on February 4, 2026 under these facts. The missing required notice prevents the ordinary three-business-day clock from starting. The third anniversary is June 12, 2026, and the question excludes earlier terminating events. Scope and exceptions: Contacting a lawyer alone is not written rescission notice to the creditor. This question tests whether the right is unexpired, not whether it has been exercised or the outcome of a disputed claim.
Why the Other Options Are Wrong
Option A: The right survives indefinitely, until the lender delivers the missing notice
The ordinary outside limit prevents an indefinite right.
Option B: The right lapsed after 1 year, the limit that applies to a disclosure failure
One year is not this rescission limit.
Option C: The right expired 3 business days after the loan was consummated in 2023
The required notice was never provided.
Exam Tip
Separate existence of the right, its deadline and its exercise.
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