An important loan document on a property that is being refinanced is known as a “Notice of Right to Cancel” or a “Rescission” document. This does not include a rental or a second home purchase. The “Notice of a Right to Cancel” will be included in loan documents on a refinance or home equity lines of credit. Not all mortgage transactions have the right of rescission. A transaction with the existing lender, a state agency mortgage, a mortgage on a second home or investment property will not include this document.
It is critical that this form be filled out correctly. Any mistake made on the rescission date can cause a delay in the funding of the loan. A couple of important things to know about the “Notice of Right to Cancel” are:
The rescission period begins three days from the day the borrower signs their loan documents. This does not include Sundays or Federal holidays. Also, should the last day of the right to cancel need to be changed, the borrower must cross it out and initial the new date in their writing only. The loan signing agent cannot do this for them. On the “Notice of Right to Cancel” form or Rescission” form the date needs to be written very clearly and neatly. If the lender cannot read the dates this could affect the timing of the loan closing.
I always carry a Rescission Calendar in my briefcase. I like to have an accurate guide to determine the exact dates of the rescission period of the loan. This provides a sure-fire way to know all the Federal holidays and will ensure the borrower will have the right date for the Notice of Right to Cancel form.