Federal Mortgage LawsQuestion 94 of 400
A borrower validly exercises the right of rescission on a home equity refinance within the three-day window. What is the effect on the security interest?
a.The security interest becomes void and the lender must return fees within 20 days
b.The borrower still owes all fees immediately
c.The lender may keep the loan proceeds
d.The rescission has no legal effect
Explanation
When a consumer rescinds, the security interest becomes void and the consumer is not liable for any amount, including finance charges. Within 20 calendar days after receiving the rescission notice, the creditor must return any money or property and take action to reflect that the security interest is terminated. The consumer then tenders the loan proceeds.
Law Reference: Truth in Lending Act (Right of Rescission, Reg Z 1026.23)Practice all 400 questions free — no signup required.
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