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3 DAY RIGHT OF RECISSION |
| A 3 day right of recission is the time period after a loan closing where a borrower can ultimately decide if he wants to committ himself to the loan terms that he signed off on. This is especially good for loans that borrowers thought they were getting a fair deal on. If terms have changed, ie, rate going up, or fees have been increased, the borrower can either walk away from the closing table, or sign the loan documents, and have a 3 day period to think about the loan terms, and if he wants to move forward or not. During a 3 day right of recission, Saturdays count as one of your 3 days, however Sundays do not count. Also, legal holidays do not count either. For example if you have a loan that closes on a Monday and their are no legal holidays during the week your loan would fund on Friday. However, if your loan closed on Tuesday and Friday was a legal holiday, then your loan would fund on Monday. In the second example, Wednesday would count as day 1, Thursday would count as day 2, Friday would not count since it is a legal holiday, and then Saturday would count as day 3 and therefore your loan would fund on a Monday. In the three days following closing the borrower has the right to rescind the loan. The borrower must exercise this right of rescission in writing. The day day right of rescission protects the rights of both the lender and the borrower. The right rescind is generally only used for owner-occupied refinance loans; there is typically no rescission for investment property loans or purchases. The loan term and interest rate cannot be negotiated during the 3 day right of recission. |
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