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Three Day Rescission When Refinancing Your Mortgage

lowest-refinance-ratesMost homeowners have heard about rescission but do not understand how it works. The three day rescission allows you time to review all of your documents after closing to make sure the loan you got is the mortgage you were promised.

You have until midnight on the third day to cancel your loan for any reason. This serves to protect homeowners from the pressure sales and bait and switch tactics commonly used by mortgage lenders.

Your mortgage broker is supposed to inform you of your rescission rights; however, most brokers conveniently forget to disclose this to you when refinancing your mortgage. If you decide to take advantage of rescission you will need to fax the written cancellations to your mortgage broker, lender, and Title Company involved with your loan. The three days time frame you have for rescission include any business day, Monday thru Friday and Saturday, excluding Sunday and Federal holidays.

Suppose for example you close your loan on Tuesday. Your three day rescission period will be Wednesday, Thursday, and end Friday evening at midnight. Remember that weekends do count, if you close on a Friday for instance your rescission period is Saturday, Monday, and Tuesday with the loan funding on Wednesday. Holidays including Labor Day, Columbus Day, Veteran’s Day, President’s Day, Independence Day, Martin Luther King’s birthday, Thanksgiving, Christmas, and New Years do not count against your rescission period.

UPDATE: Good Friday is not one of the excluded holidays and does count against your rescission period.

Knowing your rights as a homeowner is an important part of protecting yourself from abusive lending practices. Mortgage loans are a huge liability and should be treated with care. Don’t ever let a pushy mortgage broker put you in a loan you do not want or fully understand. You have the right do cancel any mortgage during the three day rescission period; just make sure you provide written notification to all parties concerned before the deadline expires. If you elect to cancel your loan I would recommend following up with a telephone call after you provide written notification to the broker, lender, and Title Company.

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