The right to cancel some home-secured loans (rescission)

For some loans that put a lien on the home you live in — like many home-equity loans or refinances with a new lender — you can cancel within 3 business days after closing. If the lender did not give you the required notices and disclosures, that time can stretch up to 3 years. You cancel by sending the lender written notice.

Consumers who gave a security interest in their principal dwelling in a covered credit transaction.

• Only for conventional, FHA, VA, USDA or home-equity loans.
• Only if the home is your primary residence.
• Does not apply to the loan you used to buy the home, or to a refinance with the same lender that adds no new money.
• The extended right ends 3 years after closing or when the home is sold, whichever comes first.

• Check closing papers for the rescission notice

  Find your closing date, the Notice of Right to Cancel, and the loan disclosures. If they were missing or wrong, talk to a lawyer quickly — the 3-year clock does not stop.

  Deadline: 3 business days after closing; at most 3 years after closing if disclosures were missing. Send written notice within that time.

  Open the tool

• Put the 3-year date on your calendar

  Add your closing date to your deadlines so you know when the right ends.

  Open the tool

• No rescission for the loan used to buy your home, or for a same-lender refinance with no new money (only the new money part may be rescindable).
• After 3 years from closing the right is gone for good, even as a defense to foreclosure (Beach v. Ocwen).
• Rescission usually means you must pay back the money you borrowed (minus finance charges); courts can set the order of steps.
• This is general legal information, not legal advice, and it does not promise any result. A HUD-approved housing counselor or a lawyer can look at your facts.

1. Federal lawTILA — right of rescission

   15 U.S.C. § 1635(a)

   Exact part: (a)

   What it says: The borrower may rescind until midnight of the third business day after closing or delivery of the required notices and disclosures, whichever is later.

   Read the official texthttps://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section1635&num=0&edition=prelim
2. Federal lawTILA — exempt transactions

   15 U.S.C. § 1635(e)

   Exact part: (e)

   What it says: Purchase-money mortgages, same-lender refinances without new money, and certain other loans are exempt.

   Read the official texthttps://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section1635&num=0&edition=prelim
3. Federal lawTILA — three-year limit

   15 U.S.C. § 1635(f)

   Exact part: (f)

   What it says: The right expires three years after closing or on sale of the property, even if disclosures were never given.

   Read the official texthttps://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section1635&num=0&edition=prelim
4. Federal regulationRegulation Z — right of rescission

   12 C.F.R. § 1026.23

   What it says: Regulation Z sets how rescission is exercised and what happens after.

   Read the official texthttps://www.ecfr.gov/current/title-12/part-1026/section-1026.23
5. Court decisionJesinoski — written notice is enough

   Jesinoski v. Countrywide Home Loans, Inc., 574 U.S. 259 (2015)

   What it says: A borrower rescinds by sending written notice within three years; a lawsuit within that time is not required.

   Read the official texthttps://www.law.cornell.edu/supremecourt/text/13-684
6. Court decisionBeach — the three years is absolute

   Beach v. Ocwen Federal Bank, 523 U.S. 410 (1998)

   What it says: After three years the right is gone completely and cannot be raised as a defense in foreclosure.

   Read the official texthttps://www.law.cornell.edu/supremecourt/text/523/410

• Homeowner wonCited for this right
  Jesinoski v. Countrywide Home Loans, Inc.

  Jesinoski v. Countrywide Home Loans, Inc., 574 U.S. 259 (2015)

  a borrower exercises the Truth in Lending right to rescind by notifying the lender in writing within three years, without needing to sue within that period

• Homeowner lostCited for this right
  Beach v. Ocwen Federal Bank

  Beach v. Ocwen Fed. Bank, 523 U.S. 410 (1998)

  the federal Truth in Lending right to rescind expires three years after closing and cannot be raised defensively after that

• Homeowner lostSame topic
  Boren v. U.S. National Bank Ass'n

  Boren v. U.S. Nat'l Bank Ass'n, 807 F.3d 99 (5th Cir. 2015)

  a lender may abandon a prior acceleration by giving notice that it seeks less than the full accelerated balance, which restarts the four-year limitations period

• Homeowner lostSame topic
  Whittier v. Ocwen Loan Servicing, L.L.C.

  Whittier v. Ocwen Loan Servicing, L.L.C., 594 F. App'x 833 (5th Cir. 2014) (per curiam) (unpublished)

  a RESPA claim against a servicer fails without evidence of actual damages caused by the violation

• Homeowner lostSame topic
  Martins v. BAC Home Loans Servicing, L.P.

  Martins v. BAC Home Loans Servicing, L.P., 722 F.3d 249 (5th Cir. 2013)

  a mortgage servicer acting for a properly assigned mortgagee may foreclose in Texas without possessing the original note, and an oral promise to modify a large loan is not enforceable

• Homeowner wonSame topic
  Renfroe v. Nationstar Mortgage, LLC

  Renfroe v. Nationstar Mortg., LLC, 822 F.3d 1241 (11th Cir. 2016)

  a servicer that answers a borrower's written request without a reasonable investigation may be liable under RESPA when the borrower alleges resulting damages

• Homeowner wonSame topic
  Marais v. Chase Home Finance LLC

  Marais v. Chase Home Fin. LLC, 736 F.3d 711 (6th Cir. 2013)

  a borrower who alleges actual damages, such as added interest, caused by a servicer's deficient response to a qualified written request states a RESPA claim

• Partial winSame topic
  Reinagel v. Deutsche Bank National Trust Co.

  Reinagel v. Deutsche Bank Nat'l Tr. Co., 735 F.3d 220 (5th Cir. 2013)

  a Texas borrower may challenge an assignment of the loan on any ground that renders it void, though not on grounds that make it merely voidable