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Mortgages

Can I change my mind after I sign the loan closing documents for my second mortgage or refinance? What is the "right of rescission?"

Yes. Even after you sign your mortgage closing documents, you may be able to change your mind.

With most refinance mortgages and home equity loans (also known as second mortgages or first liens), you have the right to cancel or the right of rescission. This gives you three business days to cancel the mortgage agreement. In this case, business days include Saturdays, but not Sundays or legal public holidays. The three days start after the date you enter into the loan or receive the TIL disclosure or the notice of the right to rescind. During a refinance, the lender usually will not pay the loan proceeds until this three-day period has ended.

If you decide you want to rescind the transaction:

  • You must notify your lender in writing that you are cancelling the loan contract and exercising your right to rescind.
  • You may use the form provided to you by your lender or a letter.

Tip: Please note that if the lender fails to give you two copies of the right to rescind or the Truth-in-Lending Disclosure, you continue to have the right to cancel the loan for up to three years.

Tip: Whatever form of written notice you use, make sure it is delivered or mailed before midnight of the third business day after your sign your closing documents or receive certain required disclosures or the notice of the right to rescind.

  • You can't rescind just by calling or visiting the lender.
  • Within 20 days after your lender receives your notice of rescission, all money or property you paid as part of the mortgage transaction must be returned to you. You must return any money or property that the lender has paid to you or has paid to others on your behalf.

Warning: Your right to rescind doesn't change your obligation to make payments on any of your other loans.  Therefore, if you refinance and then rescind the refinance loan, you will still have to pay the original loan.

Tip: You have the right to cancel your loan when doing a refinance. For example, you may find better credit terms, such as a loan that offers a lower interest rate.

Tip: If you have a problem with your mortgage closing process, you should discuss the issue or matter with your lender. If you’re having issues with your mortgage, you can also submit a complaint  to the CFPB online or by calling (855) 411-CFPB (2372). We’ll forward your complaint to the company and work to get you a response. You may also wish to get your own attorney to take a look at your issue or matter.

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