SAFE MLO test · Most missed · Episode 10
When Rescission Starts
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Start freeChapters
- 0:00The question
- 0:35The last event
- 0:49Count it
- 1:14The answers
- 1:47Recap
In short
On a refinance of the borrower's home, the right to rescind runs until midnight of the third business day after the last of three events: consummation, delivery of the rescission notice, and delivery of the material disclosures. For rescission, Saturdays count and Sundays and federal holidays do not. A loan closed Tuesday, March 3 with the notice delivered Thursday, March 5 can be cancelled until midnight on Monday, March 9. If the notice is never delivered, the right can last up to three years.
- Three events: closing, the rescission notice, the material disclosures.
- Count from the last one: three business days, Saturdays in, Sundays and holidays out.
- It ends at midnight of day three. No notice at all: up to three years.
Transcript
0:00The question
In our practice data, 10 of 14 people missed this one. The most popular wrong answer counts from the wrong day. A borrower refinances her home. The loan closes on Tuesday, March 3rd, with every disclosure. But the rescission notice only reaches her on Thursday, March 5th. When does her right to cancel end? Pause. Which answer would you pick?
0:35The last event
The clock needs three things: the closing, the notice, and the material disclosures. It starts from whichever comes last. Here, that is the notice, on Thursday.
0:49Count it
Then count three business days. For rescission, Saturday counts. Sundays and federal holidays do not. Friday is one. Saturday is two. Sunday is skipped. Monday is three. The right ends at midnight on Monday, March 9th. And if the notice never arrives at all, the right can last up to three years.
1:14The answers
Now the answers. D: Friday the 6th. That counts from the closing, but the notice came later. Out. A: Tuesday the 10th, a full week. The rule is three business days, not a week. Out. C: Thursday the 5th, the day the notice arrived. That is when the clock starts, not when it stops. Out. That leaves B: midnight on Monday, March 9th.
1:47Recap
Find the last of the three events, then count three days. Saturdays in, Sundays out. Next: anti-money laundering for loan officers. Subscribe so you catch it.
Sources
- 12 CFR 1026.23(a)(3)
- 12 CFR 1026.2(a)(6)
- EstatePass question bank: mlo-national-fed-rescission-clock-01
Independent study material. EstatePass is not affiliated with NMLS or CSBS, and nothing here is legal advice. Any lenders and borrowers in our episodes are fictional.