a. The Three Day Right of Rescission

1) Is intended to protect the homeowner from losing a home to unscrupulous sellers of home improvements, appliances, or furniture, who secure the credit advance by taking a second mortgage on the purchaser's home. Any loan entered into in one’s home (if the transaction takes place in one’s home), or using a primary residence for security for a loan, must include three or more business days in which the transaction can be cancelled.

2) Does not apply when the mortgage is used for the purchase or construction of the borrower’s residential real estate. It also does not apply for a refinance of a rental or commercial property, or a second home. It does apply for a refinance of a primary residence.

b. The rescission period in a consumer credit transaction is three business days. Sundays and holidays are not counted as business days, but Saturdays usually are.

1) If the lender fails to notify the borrower of the right to rescind, the right continues for three years or until the property is sold.

2) If the borrower exercises the right to rescind, any money or goods received must be returned within three days; for this reason, creditors usually delay funding until this period has expired. The three day right of rescission cannot be waived under any circumstances. If the borrower rescinds the transaction, all monies paid, including up front application and appraisal fees, must be returned.