What Is a Rescission Period?

With so many types of loans and mortgages, it’s no wonder that consumers struggle to understand all the specifications. Luckily, most mortgage lenders are happy to assist you with understanding the terms and conditions of your loan.

However, the key questions — for example, “rescission period” — are sometimes confusing given the numerous verbiage it is generally described. Some critical questions you may be asking are, “Is there a rescission period in a mortgage loan?” or “How do I calculate the rescission date?”. Let’s try to unravel these common problems.

What Is a Rescission Period?

A rescission period is a 3-day period (not counting weekends and holidays) that begins the day after you sign for a loan.

You can cancel your loan for any reason during this time. If you do, the lender will return all fees paid by you.

If you want to cancel your loan, you must notify the lender in writing that you do not wish to proceed with the loan. The notice must also include:

• Your name and address

• The date of your original transaction

• The date and location of your closing

• A statement saying that you want to cancel the transaction

To cancel, mail, or deliver a signed copy of your rescission notice to: [lender] at [address] by midnight on [date].

Calculating the Rescission Date

To determine the rescission date, it’s essential to know what constitutes a business day.

A business day is any day of the week except Sunday and the following federal legal holidays:

-New Year’s Day – January 1

-Martin Luther King Jr. Day – third Monday of January

-Presidents day – third Monday of February

-Memorial Day – last Monday of May

-Independence Day – July 4

-Labor Day – first Monday of September

-Columbus Day – Second Monday of October

-Veterans Day – November 11

-Thanksgiving Day – fourth Thursday of November

-Christmas Day – December 25

-When one of these holidays falls on the weekend, the day the holiday is celebrated (e.g., the preceding Friday or following Monday) may not be considered a business day in our rescission calendar.

Rescinding a Loan Transaction

The cancellation notification must be received by midnight of the third business day after the transfer. The notice must not be received by the lender or postmarked by the deadline; it must only be mailed by the deadline. For example, suppose this Ends at midnight on Saturday and a rescission notice is sent on Saturday at 10:00 p.m. In that case, the loan is considered canceled even though the information will not be postmarked until Monday.