Consumer’s Right of Rescission in Credit Transactions

By Yeji Suh, ATG Law Clerk


The right of rescission in credit transactions is a powerful tool granted to the consumer under federal law. The rescission provisions of Regulation Z, the implementing regulation of the Truth in Lending Act (TILA), impose a series of disclosure requirements on the lender who extends credits to the consumer and takes security interest on the consumer’s principal dwelling. The mandatory material disclosures include various terms and costs of the loan. The lender is also required to deliver the notice of the right of rescission to each consumer in the transaction. While the consumer has a guaranteed three-day right of rescission when the lender complies with the disclosure requirements, if the lender fails to do so, the right of rescission extends to three years. Even technical violation of TILA disclosures may trigger the consumer’s right of rescission, which can be exercised within three years after consummation. It is therefore important for the lender to pay close attention to the rescission provisions of Regulation Z and related judicial decisions.

Part I of this Article overviews the rescission provisions of Regulation Z, including definitions of key terms, and corresponding judicial interpretations. Part II discusses constitutionality of Regulation Z surrounding two different terms used in TILA and Regulation Z to cover “borrowers.” Part III reviews several cases discussing what clear and conspicuous standard of TILA disclosures means in specific circumstances.

Text of TILA and Regulation Z: 15 U.S.C. § 1635 and 12 C.F.R. § 226.23

Codified in 15 U.S.C. § 1601 et seq., Truth in Lending Act (TILA) expressly states its purpose as “assur[ing] a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and protect[ing] the consumer against inaccurate and unfair credit billing and credit card practices.” 15 U.S.C. § 1601(a).

TILA imposes a series of disclosure requirements on creditors, while at the same time affording consumers certain rights to be exercised in case creditors fail to provide them with the requisite disclosures. TILA violation can result in criminal charges as well as civil charges on creditors. 15 U.S.C. § 1611 (Criminal liability for willful and knowing violation); § 1640 (Civil liability). Consumers can seek damages under § 1640 or can invoke the right of rescission under § 1635. 15 U.S.C. § 1635 (Right of rescission as to certain transactions).

The focus of this Article is the consumer’s right of rescission under § 1635. TILA authorizes regulators to prescribe “additional requirements, classifications, differentiations, or other provisions,” and to “provide for such adjustments and exceptions for all or any class of transactions,” if determined to be necessary and proper to carry out the purposes of TILA. 15 U.S.C. § 1604(a).

Accordingly, § 226.23 of Regulation Z governs how TILA right of rescission under § 1635 plays out. The substance of both authorities is similar. Thus, except for Part II, where the constitutionality of Regulation Z is discussed, this Article refers to TILA and Regulation Z interchangeably.

Target Transaction

A consumer can exercise the right of rescission in “a credit transaction in which a security interest is or will be retained or acquired in a consumer’s principal dwelling.” 12 C.F.R. § 226.23(a)(1). If not excepted under § 226.23(f), a consumer who mortgages his or her home to a creditor is entitled to a right of rescission. 12 C.F.R. § 226.23(a).

The regulation does not define “principal dwelling,” but defines “dwelling” as “a residential structure that contains one to four units, whether or not that structure is attached to real property.” 12 C.F.R. § 226.2(a)(19). Thus, in addition to an individual condominium unit and cooperative unit, the term covers a mobile home and trailer, if it is used as a residence. Id.

Note that § 226.23(f) excepts certain transactions from the target of rescission. For instance, a consumer cannot rescind a “residential mortgage transaction,” see 12 C.F.R. § 226.23(f)(1), which is defined as “a transaction in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest is created or retained in the consumer’s principal dwelling to finance the acquisition or initial construction of that dwelling.” 12 C.F.R. 226.2(a)(24). A refinancing or consolidation by the same creditor is also excluded, but the right of rescission still attaches to the extent the new amount exceeds the unpaid principal balance, unpaid finance charge, and the costs of such refinancing or consolidation. 12 C.F.R. § 226.23(f)(2).

Three-day or Three-year Right of Rescission

The right of rescission lasts for three days if the creditor complied with the disclosure requirements. 12 C.F.R. § 226.23(a)(3) (“until midnight of the third business day following consummation, delivery of the notice, . . . , or delivery of all material disclosures, whichever occurs last.”). If the creditor failed to disclose, however, the right of rescission lasts for three years. Id.(“If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation, upon transfer of all of the consumer’s interest in the property, or upon sale of the property, whichever occurs first.”). Consummation is defined as “the time that a consumer becomes contractually obligated on a credit transaction.” 12 C.F.R. § 226.2(a)(13).  

How to count three business days? For purposes of rescission, the regulation defines business day as “all calendar days except Sundays and the legal public holidays specified in 5 U.S.C. § 6103(a).” 12 C.F.R. § 223.2(a)(6).

In the year when Christmas fell on Sunday, the creditor didn’t count the following Monday as business day because Monday was the legally observed holiday. Mayoral v. WMC Mortg., LLC, No. 08C7292, 2009 WL 3272697, at *2 (N.D. Ill. Oct. 6, 2009). The consumer’s opposing view was that Monday should have been counted as business day to make the disclosure clear and conspicuous pursuant to TILA, even though it meant that the consumer would be given one fewer day to rescind. Id. Relying on the Federal Reserve Board’s official staff interpretation as well as the definition provided in § 223.2(a)(6), the court ruled that the creditor is correct. Id. at *3. In dicta, the court also said that, if holiday falls on Saturday, the previous Friday is still business day even if Friday is legally observed holiday. Id. The court reasoned that, because Saturday is business day for purposes of rescission, the consumer should not be given an extra day by counting both Saturday and Friday as holidays. Id.

Can a state law remedy revive the right of rescission after the three-year period expires? The answer is no, even though § 1635(i)(3) provides that “nothing in this subsection affects a consumer’s right of rescission in recoupment under state law.” (No equivalent provision appears in Regulation Z, though, see 12 C.F.R. § 226.23).

A defendant’s right to plead recoupment is “a defense arising out of some feature of the transaction upon which a plaintiff’s action is grounded,” Rothensies v. Electric Storage Battery Co., 329 U.S. 296, 299 (1946), and it “survives the expiration of the period provided by a statute of limitation that would otherwise bar the claim as an independent cause of action.” Beach v. Ocwen Federal Bank, 523 U.S. 410, 415 (1998). Although there is no Illinois statute that specifically addresses TILA right of rescission in recoupment claims, there is a state law remedy that can save a claim barred by a statute of limitation. See 735 ILCS 5/13-207 (“A defendant may plead a set-off or counterclaim barred by the statute of limitation, while held or owned by him or her, to any action, the cause of which was owned by the plaintiff or person under whom he or she claims, before such set-off or counterclaim was so barred, and not otherwise.”). U.S. Bank Nat’l Assoc. v. Manzo, 2011 Ill. App. 1st 103115, 960 N.E.2d 1238, 1249 (Ill. App. Ct. 2011).

But the U.S. Supreme Court made clear that the three-year limit in TILA is not a statute of limitation. Beach, 523 U.S. at 416–19. The Court observed that the plain language of § 1635(f) tells that it is governing more than the time for bringing an action; it is governing the life of the underlying right. Id. at 417. Compare the language in § 1635(f) (“the right of rescission . . . shall expire” at the end of the time period) with the language in § 1640(e) (the 1-year limit . . .  “does not bar a person from asserting a violation of this subchapter in an action to collect the debt which was brought more than one year from the date of the occurrence of the violation as a matter of defense by recoupment or set-off in such action, except as otherwise provided by State Law.”).

Thus, TILA right of rescission is completely extinguished once the three-year period expires. Beach, 523 U.S. at 412 (holding that “§ 1635(f) completely extinguishes the right of rescission at the end of the 3-year period.”). Illinois courts take the same position as Beach. Wells Fargo Bank, N.A. v. Terry, 401 Ill. App. 3d 18, 928 N.E.2d 540, 545 (Ill. App. Ct. 2010) (refinancing transaction; “Beach makes clear that section 1635(f) is a statute of repose that extinguishes all claims for rescission outside the three-year period. Section 1635(i)(3) does not save Terry’s claim in the absence of an Illinois statute that expressly allows a defensive rescission claim”) (emphasis removed); Manzo, 960 N.E.2d 1238 (Ill. App. Ct. 2011) (applying Terry in a foreclosure proceeding). So a consumer, who missed the three-year deadline by one day, couldn’t raise the Illinois state law claim, 735 ILCS 5/13-207, to revive the TILA right of rescission. Manzo, 960 N.E.2d 1238.

Notice Requirement on Both Consumers and Creditors

The creditor must deliver the notice of right to rescind to each consumer in the transaction. 12 C.F.R. § 226.23(b)(1). The notice must disclose the requisite information clearly and conspicuously. Id. The requisite information comprises the retention or acquisition of a security interest in the consumer’s principal dwelling, the consumer’s right to rescind the transaction, information on how to exercise the right to rescind, the effects of rescission, and the expiration date of rescission. 12 C.F.R. § 226.23(b)(1)(i)–(v). To satisfy the notice requirement, the creditor is required to use a model form in Appendix H or the one substantially similar. 12 C.F.R. § 226.23(b)(2).

To validly exercise the right of rescission, the consumer also is required to let the creditor know that he or she is rescinding the transaction. 12 C.F.R. § 226.23(a)(2). The notice needs to be given “by mail, telegram, or other means of written communication.” Id. When the consumer mailed the notice of rescission, even if the creditor didn’t honor the rescission within the deadline, the consumer didn’t have to take any additional action, such as bringing a lawsuit to enforce the right of rescission. Cocroft  v. HSBC Bank USA, N.A., No. 10C3408, 2012 WL 1378645, *4 (N.D. Ill. Apr. 20, 2012) (distinguishing the 9th Cir. case where the consumer was required to bring a separate action to enforce her right because the notice was sent to the wrong party).

While mail is a statutorily enumerated means, not every means of written communication can sufficiently notify the creditor of the consumer’s intent to rescind. In an attempt to negotiate a loan modification agreement with the creditor when the creditor began a foreclosure action, the consumer sent a total of four letters that indicated a possibility of invoking the right of rescission if the agreement is not reached. Manzo, 960 N.E.2d at 1241–43. None of the four letters were found to be sufficient notice of rescission. Id. at 1247. The consumer’s counterclaim, which was filed after the deadline, read, “[t]he Borrowers, by filing this action, elect to rescind the subject transaction,” which the court said indicated that the consumer intended to rescind the transaction only by filing the counterclaim. Id. at 1248. The languages in all the other letters were conditional at best, postponing the date of rescission. Id. To serve as notice of rescission, the court said, the intent expressed on the letters must have been the present one. Id. at 1247 (stating that Regulation Z requires the written communication to “clearly state that the borrower is rescinding the mortgage in the present.”).

Effects of Rescission

Once the consumer validly rescinds the transaction, the security interest giving rise to the right of rescission becomes void. 12. C.F.R. § 226.23(d)(1). In addition, the consumer is no longer liable for any amount, including any finance charge. Id.  

If the creditor receives the notice of rescission from the consumer, the creditor is required to return “any money or property that has been given to anyone in connection with the transaction,” within 20 calendar days after such receipt. 12 C.F.R. § 226.23(d)(2). In addition, the creditor needs to take “any action necessary to reflect the termination of the security interest.” 12 C.F.R. § 226.23(d)(2). Note that, while the regulation and § 1635(b) refer to the termination of “security interest,” § 1635(a) refers to a “right to rescind the transaction,” not just a right to rescind the security interest. Handy v. Anchor Mortg. Corp., 464 F.3d 760, 765 (7th Cir. 2006).

The Seventh Circuit said that “rescinding a loan transaction requires unwinding the transaction in its entirety and thus requires returning the borrowers to the position they occupied prior to the loan agreement.” Handy, 464 F.3d at 765 (7th Cir. 2006), quoting and agreeing with Barett v. JP Morgan Chase Bank, N.A., 445 F.3d 874, 877 (6th Cir. 2006). So, the creditor’s release of the mortgage wasn’t enough to bring the party back to the position prior to the loan agreement. Handy, 464 F.3d at 765–66. Even if the consumer paid off the underlying loan and the creditor released the mortgage, the court ruled that the creditor needed to reimburse the consumer the interest payments made by the consumer while the loan was outstanding, because, in general, the right to rescind “encompasses a right to return to the status quo that existed before the loan.” Id. (emphasis removed)

Also, note that the creditor’s action does not effect the termination of mortgage; it only reflects the termination. Cocroft v. HSBC Bank USA., N.A., No. 10C3408, 2012 WL 1378645, at *3 (N.D. Ill. Apr. 20, 2012). The creditor’s failure to reflect the termination thus could not change the fact that the consumer was entitled to the right of rescission. Id.

Until the creditor takes the necessary action to reflect the termination of the security interest, the consumer may retain possession of any money or property given by the creditor. 12 C.F.R. § 226.23(d)(3). The regulation requires the consumer to tender the money or property or the reasonable value of it to the creditor only after the creditor does its part. Id. Still, the exact procedure can be modified by court orders. 12 C.F.R. § 226.23(d)(4). Because the rescission is an equitable remedy, “the court may condition the return of monies to the debtor upon the return of property to the creditor.” Rowland v. Magna Millikin Bank of Decatur, N.A., 812 F. Supp. 875, 880 (C.D. Ill. 1992). So the Rowland court ordered the consumer to first return the reasonable value of window installments, which were financed by the loan from the creditor, before the creditor is asked to return the money to the consumer. Id. at 881.

Right of Rescission Belongs to Whom—Consumers or Obligors?

While TILA uses the term, “obligor,” Regulation Z uses the term, “consumer.” What effects does this difference have on the consumer’s (or the borrower’s, mortgagor’s, obligor’s, etc.) right to rescind?

In order to determine whether the debtor’s right to rescind exists, a bankruptcy court in Massachusetts ruled on the constitutionality of § 226.23 of Regulation Z because of its use of the term, “consumer.” In re Smith-Pena, 484 B.R. 512 (Bankr. D. Mass. 2013). The debtor didn’t sign the promissory note; she only co-signed the mortgage that secured her husband’s loan. While the bankruptcy court based its decision on the Massachusetts versions of TILA and Regulation Z, it also discussed TILA and Regulation Z because (1) TILA was intended to be floor of consumer protection laws, not ceilings, and (2) the Massachusetts laws could not give fewer protections than what the federal laws afford to consumers. Id. at 526–27. In any event, the Massachusetts law and regulation governing the right of rescission are virtually the same as its federal counterparts in TILA and Regulation Z. Id. at 517–18.

When the creditor filed a proof of claim, the debtor objected, seeking to exercise her right to rescind under the Massachusetts regulation. The debtor asserted that the term, “consumer,” in the regulation covers her. Id. at 515–17. The creditor, on the other hand, countered that the debtor can’t invoke the right of rescission because, under the Massachusetts statute, she’s not an obligor. Id. The bankruptcy court agreed with the creditor, and in doing so, said that, to the extent Regulation Z is construed to afford a protection to someone who is not obliged to pay the underlying loan, it is an “irrational construction” of TILA. Id. at 528.

Regulation Z defines consumer as “a cardholder or natural person to whom consumer credit is offered or extended,” and for purposes of rescission, the term also includes “a natural person in whose principal dwelling a security interest is or will be retained or acquired, if that person’s ownership interest in the dwelling is or will be subject to the security interest.” 12 C.F.R. § 226.2(a)(11). Official Commentary to Regulation Z further provides that, even if that person is not liable, either primarily or secondarily, on the underlying consumer credit transaction, he or she is a consumer for purposes of rescission. 12 C.F.R. Pt. 226, Supp. I (2011); In re Smith-Pena, 484 B.R. at 527 n. 16. According to these authorities then, the debtor in this case is clearly a “consumer” that is entitled to a right of rescission under Regulation Z. In re Smith-Pena, 484 B.R. at 527.

On the other hand, TILA or the regulation does not define “obligor.” Id. at 518. So the bankruptcy court looked to Black’s Law Dictionary and employed the rules of statutory construction to figure out the legislative intent behind the use of the term of obligor. Id. at 521. The bankruptcy court believed that Congress’s use of the term obligor and the legislative history relating to the rescission provision evidence a clear intent to protect the interests of “consumers who incur an obligation with regard to the credit transaction.” Id. at 522, 528. So the debtor, who was not obliged to pay the underlying loan, could not be an obligor who is entitled to the TILA protection. Id. at 528.

Yet it would be important to recall that TILA authorized regulators to prescribe additional requirements, differentiation, exceptions, if they are determined to be necessary to fulfill the purposes of TILA. 15 U.S.C. § 1604(a). The bankruptcy court also acknowledged that the Board’s interpretation of TILA is afforded a considerable discretion. In re Smith-Pena, 484 B.R. at 527. Still, the bankruptcy court gave more weight to the clear intent of Congress expressed in TILA, and said that the constitutional constraint on executive authority supersedes deference to it. Id. at 527–28. Indeed, the bankruptcy court maintained that the use of the term, consumer, in Regulation Z is manifestly contrary to TILA. Id. at 528.

How Much Disclosure is Clear and Conspicuous?

Hypertechnicality Standard

Disclosure requirements under TILA and Regulation Z impose a “strict liability” on the creditor. Rowland v. Magna Millikin Bank of Decatur, N.A., 812 F. Supp. 875, 878 (C.D. Ill. 1992). They are liberally construed in favor of the consumer, but strictly construed against the creditor. Id.; see Smith v. No. 2 Galesburg Crown Finance Corp., 615 F.2d 407, 417 (7th Cir. 1980) (requiring “strict adherence to the required terminology under [TILA] and regulations.”). The Seventh Circuit, while acknowledging that many of TILA violations are technical violations without necessarily showing egregious intent on the part of the creditor, said that it was not congressional intention that the creditor could escape liability even for technical violations or minor deviations. Id. at 416–17; Cowen v. Bank United of Texas, FSB, 70 F.3d 937, 941 (7th Cir. 1995) (stating that “hypertechnicality reigns” in TILA cases).

When the Consumer’s Copy of Disclosure Statement is Different from the Creditor’s Copy

If the consumer’s copy of the disclosure statement is different from the creditor’s copy, the court looks at the consumer’s copy to determine whether the disclosure is clear and conspicuous. Rowland, 812 F. Supp. at 879–80. When the consumer sought to exercise her right to rescind after three-day limit, but within the three-year period, the consumer pointed to the lack of the requisite disclosure on her copy of the disclosure document. Id. at 877. The consumer’s copy was blurred and illegible, whereas the creditor’s copy was completely legible. Id. The court said that the creditor’s disclosure couldn’t satisfy the clear and conspicuous standard. Id. at 878–80.

The court relied on the regulatory provision, which provides that “the creditor shall make the disclosures required by this subpart clearly and conspicuously in writing, in a form that the consumer may keep.” 12 C.F.R. § 226.17(a)(1). See also Smith, 615 F.2d at 418 (“Nothing can be more central to the entire scheme of TILA than the notion that disclosure must be legible, and disclosure is meaningless if consumer is unable to decipher.”).

What Constitutes Material Disclosure/Non-disclosure?

In footnote 48 of § 226.23, “material disclosure” is defined as “disclosures of the annual percentage rate, the finance charge, the amount financed, the total of payments, the payment schedule, . . . .” 12 C.F.R. § 226.23(a)(3) n. 8. See Rowland, 812 F. Supp. at 879 (“failure to disclose the payment schedule is a material non-disclosure”); cf. id. (stating that the regulations do not consider a failure to disclose that the creditor had taken a security interest in the consumer’s home as constituting a material non-disclosure); but see 12 C.F.R. § 226.23(b)(1)(i) (considering “the retention or acquisition of a security interest in the consumer’s principal dwelling” as part of the requisite disclosure).

The finance charge, if not disclosed, is grounds for material non-disclosure. Rowland, 812 F. Supp. at 879. This is so even if the other material items, such as the net amount of loan, face amount of loan, monthly installment, and annual percentage rate, all legibly appear on the disclosure document. Id. As TILA provides, the finance charge “shall be disclosed more conspicuously than other terms.” 15 U.S.C. § 1632(a).

The finance charge, even if disclosed, may extend the consumer’s right to rescind beyond three days if it’s inaccurate due to underestimation. 12 C.F.R. § 226.23 (g)–(h). In a foreclosure proceeding, if underestimation is by no more than $35, the amount is considered accurate. § 226.23(h)(2)(i). In a refinancing of a residential mortgage transaction with a new creditor, if there is no new advance and no consolidation of existing loans, underestimation by no more than one-half of one percent of the face amount of the note is accurate. § 226.23(g)(2)(i). In all other transactions, underestimation by no more than one percent of the face amount of the note is accurate. § 226.23(g)(1)(i). If the amount calculated is less than $100, underestimation by $100 is accurate. § 226.23(g)(1)–(2). Overstatement of finance charge, however, is generally accurate. 12 C.F.R. § 226.23(g)–(h); Sandifer v. Freedom Mortg. Corp., No. 08-CV-1183, 2010 WL 1463478, at *3 (N.D. Ill. 2010) (“An overstated finance charge is not a TILA violation.”).

What If Consumers Receive Conflicting Information?

The Effect of Non-refundability of Advance Fee or Lock-in Agreement

A consumer received the otherwise sufficient disclosure of the right to rescind from the creditor, but later also received an “agreement concerning the non-refundability of advance fee.” Sandifer v. Freedom Mortg. Corp., 2010 WL 1463478, at *4 (N.D. Ill. 2010). The agreement contained the following language: “an application fee, $350, is non-refundable if the loan fails to close, including if the consumer withdraws her loan application.” Id. The consumer contended that the term “withdraws” is equivalent to “rescind” or “cancel.” Id. So the non-refundability of money in case the consumer “rescinds” her loan application made the disclosure of the right to rescind misleading and unclear, the consumer argued. Id.

But the court said that the loan must close before a TILA right to rescind arises. Id. The non-refundability of advance fee only concerned the situation before the loan was closed. Id. Any restriction on the consumer’s right to cancel the loan before closing could not affect or interfere with the consumer’s TILA right of rescission that arises after closing. Id. Similarly, a lock-in agreement only concerns the situation pre-closing, so could not be a factor that renders the otherwise sufficient disclosure defective. Id.

The court observed that “TILA and Regulation Z do not clearly indicate that the concept of rescission, or the language requiring a refund upon rescission, applies to a situation where a loan has not yet closed. Therefore, a holding that the rescission and refund provision apply to such a situation would constitute an impermissible expansion of the statute and the regulation.” Id. at *5.

Still, it is a TILA violation if the creditor says, after closing, in response to the consumer’s request to lower the interest rate, that the lock-in fee would be non-refundable if the consumer invokes the right of rescission. Id., citing and discussing Jones v. E*Trade, 397 F.3d 810 (9th Cir. 2005). Note that the court didn’t say whether the lock-in agreement itself has any adverse effect on the notice of the right to rescind. Id. The court’s holding was specifically based on the creditor’s oral representation, which the court found reflected the corporate policy. Id.

The Effect of Using H-8 and H-9 Disclosure Forms Simultaneously

H-8 form is used when the new creditor refinances the loan. H-9 form is used when the original creditor refinances the loan. Handy v. Anchor Mortg. Corp., 464 F.3d 760, 763 (7th Cir. 2006). The language concerning the notice of the right to rescind differs between the two forms. In H-8, it reads, “If you cancel the transaction, the mortgage lien or security interest is also cancelled.” In H-9, it reads, “If you cancel this new transaction, it will not affect any amount that you presently owe. Your home is the security for that amount.” Id.

A consumer who entered into a refinancing agreement with a new creditor was provided with a number of disclosure forms of two types: H-8 and H-9. Contending that this is a violation of TILA disclosure, the consumer invoked the right of rescission two years after the consummation of the refinancing agreement. Id. at 761, 763. The court ruled for the consumer, saying that presenting both forms of H-8 and H-9 failed to meet the clear and conspicuous disclosure. Id. at 764.

The creditor countered that, because H-9 is substantially similar to H-8, using both forms didn’t confuse the consumer. Id. at 763–64. The argument misses a point, the court maintained, because the issue was not how the disclosure affects a particular consumer. Id. at 764. The issue was whether the disclosure meets TILA standard of clear and conspicuous—a question of law, which the court said should be solely determined based on the contents of the disclosure documents. Id. When more than one reading was plausible, it couldn’t provide a clear notice of what the consumer’s right entails. Id. The court stressed the hypertechnicality standard for TILA disclosures. Id.


As observed, courts tend to strictly enforce the rescission provisions of Regulation Z often in favor of the consumer. In light of these decisions, attorneys representing borrowers are likely to scrutinize the lender’s compliance with TILA disclosures for any violation that could extend the rescission period to three years. If the consumer exercises the right of rescission, not only does the mortgage that secured the credit transaction become void, the lender is required to return any money or property given to anyone in connection with the transaction within 20 days. To avoid such consequences, it is important for the lender to comply with technical rules laid out in Regulation Z as well as case laws interpreting clear and conspicuous standard of TILA disclosures. 

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Posted on: Wed, 10/09/2013 - 3:04pm