Under the federal Truth in Lending Act (TILA/Regulation Z), the 3-day right of rescission applies to:
Correct Answer
B) Refinances and home equity loans or lines of credit (HELOCs) secured by the borrower's primary residence
Under TILA (Regulation Z), borrowers have a 3-business-day right of rescission for non-purchase credit transactions secured by their primary residence — most commonly refinances and home equity loans or lines of credit (HELOCs). The right of rescission does NOT apply to purchase money mortgages (loans used to buy the home), commercial real estate transactions, or loans secured by a second home or investment property. The 3-day period begins on the latest of: the closing date, the date the borrower receives the Truth-in-Lending disclosure, or the date the borrower receives the Notice of Right to Cancel.
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Related Topics & Key Terms
Related Topics:
Key Terms:
Related Concepts
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
A fixed-rate mortgage has an interest rate that remains constant for the entire term of the loan, resulting in equal monthly principal and interest payments throughout the life of the mortgage.
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
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