United States
Hong KongThe right of rescission
Three business days after consummation on a refinance secured by the borrower's principal dwelling. It extends to three years if the notice or material disclosures were never delivered, and the creditor then has 20 calendar days to unwind.
A borrower can walk away from certain mortgages after signing. Three business days, no reason required, no penalty.
When it applies
On a credit transaction secured by the borrower's principal dwelling that is not a purchase. In practice: refinances with a new lender, home equity loans and HELOCs on a primary residence.
Not on a purchase. Not on a second home or an investment property. Not on a refinance with the same creditor beyond the new money advanced.
A scenario describes a buyer having second thoughts the day after closing on a new home. There is no rescission right. Candidates who have learned "three business days" without the anchor get this wrong.
How the three days are counted
From the latest of three events: consummation, delivery of the material disclosures, or delivery of the rescission notice.
Business days here means all calendar days except Sundays and specified public holidays, so a Saturday counts. That is the more precise of Regulation Z's two definitions.
The three-year extension
If the required notice or the material disclosures were never delivered, the period extends to three years from consummation.
This is why delivery matters so much operationally. A missing notice does not create a small paperwork problem; it leaves the loan rescindable for three years.
What happens when it is exercised
The security interest becomes void. The creditor has 20 calendar days to return any money or property and release the security interest, under 12 CFR 1026.23(d)(2).
The borrower then tenders back what they received. The sequence matters: the creditor goes first.
Funds are not disbursed during the window
No money changes hands and no services are performed until the rescission period expires. That is the practical consequence originators explain to borrowers most often.
Common questions
What is the right of rescission?
A borrower's right to cancel certain mortgages within three business days of consummation, without reason or penalty.
Does rescission apply to a home purchase?
No. It applies to refinances, home equity loans and HELOCs on a principal dwelling.
When does the rescission period extend to three years?
When the required notice or the material disclosures were never delivered.
How are the three days counted?
From the latest of consummation, delivery of material disclosures or delivery of the notice, counting all days except Sundays and specified holidays.
What must the creditor do if a borrower rescinds?
Return money or property and release the security interest within 20 calendar days.