IMPORTANT INFORMATION

The right of rescission.

A law called the Truth in Lending Act allows you to rescind, or cancel some types of home loans. The right of rescission provides a three-day period when you can back out of the loan before you get the borrowed money, no questions asked.

Within 20 days, the lender must give up its claim to your property as collateral and must refund any fees you paid.

truth in lending act is designed to shield borrowers in those instances deemed predatory or negligent and grants the right of rescission. The law is intended to thwart forward looking statements by ambitious and compensation driven lenders and staff, and to include all of its agents. Forward-looking statements related to future events or our future financial performance. The years ranging from 2004 through 2006 will be remembered by the industry as a period of negligent non agency subprime lending with little or any duty of care being shown a borrower in underwriting a loan.

High cost loans offering aggressive "no income stated" mortgages were employed by directors and senior management to try to fleece elderly, minority or unsophisticated borrowers out of their money and even their homes. Needless to say, these lenders posted significant record earnings' and volume at the expense of those customers' who were duped in financing they never cold afford.

Now, contrary to the parties belief they did nothing wrong, consumer homeowners who were victims can use the law to protect themselves. The homeowner who takes out a home equity line of credit to buy a car, then thinks it over for a couple of days and decides that such financing would be a bad move, can rescind the loan. Likewise for the homeowner who takes out a home equity loan, then finds a better deal a day or two later. The homeowner can rescind the first deal within three business days and take the second.

Different Lender - The right of rescission is available for all mortgages when you refinance with another lender and when you take out a home equity loan or line of credit. You're eligible if you obtain financing with cash to borrower proceeds. Therein the entire amount can be rescinded. For loans settled using a "cash-out refinance what you owed on your current mortgage is calculated from the difference in cash when financing through your same lender. Otherwise a lender rate and term refinance will limit the borrower to have the right to rescind only the cash-out portion. The type of home you have is not restricted for eligibility and you have the right of rescission.

A borrower must exercise the right of rescission

• within three business days of signing the loan papers,
• receiving all the loan disclosures,
• Upon receipt copy of the notice that there is a right of rescission

We contend all three of those requirements are intended calculated for the same day. The clock starts ticking only after all three conditions have been satisfied. The three day term commences and continues through normal business days. The definition for business days are day except Sundays and federal holidays. Therefore, Saturday counts as a business day, even if the lender's office is closed on Saturdays. The right of rescission expires at midnight concluding the third full business day after the papers are signed and all other conditions are met.

So, for example, if you close a home equity loan on[date] , the clock starts ticking [date] and continues to tick on Saturday, stops on Sunday and resumes on Monday. The right of rescission ends [date] at midnight. To exercise your right of rescission, you must inform the lender in writing. It's mandatory and phone calls are not allowed as a mean to exercise the right if rescission.

The letter must be post marked by the deadline. Therefore, if for example you mail the letter just before the deadline, , and Monday is a federal holiday so the letter isn't postmarked until Tuesday, you still have rescinded the loan.

The right of rescission also is not available as follows:

1. when you refinance your loan with the same lender
2. When the house in question is not your primary residence (in other words, if it's your vacation home or an investment property
3. if you borrow the money for your business, or
4. if you're borrowing from a state agency

You can ask that the lender waive the right of rescission but only in emergencies. To appease regulators, your lender is unlikely to let you waive the right of rescission. Examples of acceptable emergencies: Forces f nature ( a storm destroys the homes roof and need cash to pay for a repair), or you need the money immediately to pay for a medical procedure.

 

Maher Soliman

Compliance Officer