The right of rescission gives you three business days after closing to cancel a home equity loan, HELOC, or non-purchase refinance secured by your primary home, with no penalty and no reason required. It comes from the Truth in Lending Act, 15 USC § 1635, implemented by the CFPB at 12 CFR § 1026.23 for closed-end loans and § 1026.15 for HELOCs. The clock starts on the latest of three events: you sign the credit contract, you receive the material TILA disclosures and you receive two copies of the rescission notice. But it doesn’t apply to a mortgage used to buy your home. It also doesn’t apply to loans on second homes, vacation homes or investment properties.
What the right of rescission is
Congress passed TILA in 1968 to protect homeowners from high-pressure closings on the asset with the least tolerable failure mode: the house they actually live in. Regulation Z spells out the mechanics. Section 1026.23 covers closed-end second liens and refinances. Section 1026.15 covers HELOCs. The CFPB is the primary enforcer and publishes the model rescission notices at Appendix H, Forms H-8 and H-9.
When you have the right, and when you don’t
Rescission applies to these transactions on your principal dwelling:
- Home equity loans (closed-end second mortgages)
- HELOCs at the time of account opening
- Rate-and-term refinances with a new lender
- Cash-out refinances with a new lender
- Refinances with the same lender, but only to the extent of new money advanced
It doesn’t apply to purchase-money mortgages used to buy the home, loans on second homes, vacation homes or investment properties, business-purpose or commercial credit, or draws on an existing HELOC after the account was opened.
The purchase-mortgage carve-out is the single most common misunderstanding. So if you just signed to buy a house, there’s no federal three-day window to cancel that loan. TILA never provided that right for purchase money.
For a refinance with the lender who holds your current mortgage, § 1026.23(f)(2) preserves the rescission right only on the portion of new money advanced beyond the existing payoff, earned unpaid finance charge and refinancing costs. The math is technical. And if you’re refinancing with your existing servicer, ask the closer to confirm whether rescission is available and on what dollar figure.
When the three-day clock starts
Three events trigger the count. The window starts on the latest of them:
- You sign the credit contract at closing
- You receive the material TILA disclosures (the Closing Disclosure for a closed-end loan, or the account-opening disclosures for a HELOC)
- You and any other consumer with an ownership interest each receive two copies of the notice of the right to rescind
If any one of the three arrives late, the clock restarts from that later date. Two copies of the notice go to every consumer whose ownership interest is or will be subject to the security interest. Spouses who jointly own the home each get two copies, and either spouse may rescind unilaterally.
How business days are counted
Here’s the practical reality: Regulation Z uses the more inclusive definition of business day for rescission counting. Every calendar day counts except Sunday and the federal legal public holidays listed at 5 USC § 6103(a). Saturday counts. This differs from the narrower business-day definition TILA uses elsewhere, and it catches borrowers who assume weekends are excluded.
Worked example. You close at 4 pm on Thursday and receive your Closing Disclosure and two rescission notices at signing. Friday is day 1. Saturday is day 2. Sunday is excluded. Monday is day 3. Your written cancellation must be sent by midnight Monday.
The federal holidays that pause the count in 2026 are New Year’s Day, Martin Luther King Jr. Day, Washington’s Birthday, Memorial Day, Juneteenth, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day. Close on the Friday before Memorial Day weekend and the count runs Saturday (day 1), Tuesday (day 2, because Sunday and Memorial Day Monday are both excluded), Wednesday (day 3). Notice is due by midnight Wednesday.
How to cancel in writing
Rescission has to be in writing. A phone call to the loan officer doesn’t count. An in-person statement at the branch doesn’t count either. The notice must be signed, dated and sent or delivered before midnight of the third business day. And postmark controls, not receipt.
Steps to cancel:
- Locate the notice of right to rescind the lender gave you at closing. It lists the address, fax number or electronic method the lender designated for delivery.
- Write and sign a short cancellation statement. Sample language: “I wish to cancel the above transaction. [Date] [Signature].” You can also complete and return the tear-off cancellation form on the lender’s notice.
- Send the notice by the method listed on the lender’s form, before midnight of day 3. Certified mail with return receipt is the standard proof-of-delivery method. Fax with a transmission confirmation also works. Email delivery is accepted in some lender workflows and not others; use the address the lender designated on the notice and keep the sent record.
- Keep a copy of the signed notice and the delivery proof.
What happens after you cancel
Within 20 calendar days of receiving your notice, the lender must release the security interest on the home and refund every dollar you paid in connection with the loan – application fees, appraisal fees, origination points, credit report fees and closing costs. You’re then obligated to tender back any loan proceeds you received. Section 1026.23(d) governs the mechanics. The rescission is unconditional. You don’t owe an explanation, and the lender can’t condition the refund on your reason.
The extended three-year rescission window
So what happens if the lender botches the paperwork? If they fail to deliver the material TILA disclosures, fail to deliver two copies of the rescission notice to each consumer, use the wrong model form (H-8 in a same-creditor refinance where H-9 is required, or vice versa), or deliver materially inaccurate disclosures, the rescission window extends to three years from consummation, or until you sell the property, whichever comes first.
In Jesinoski v. Countrywide Home Loans, 574 U.S. 259 (2015), the Supreme Court held that a borrower exercises the extended right by sending written notice to the lender within three years. No lawsuit is required to preserve the right. The lender can still dispute whether the defect actually occurred, but the written notice itself is the timely act.
Worth knowing: the extended window is a serious remedy with a high evidentiary bar. If you think a disclosure defect happened at your closing, consult a consumer-protection attorney before sending notice.
The bona fide personal financial emergency waiver
You can waive or shorten the rescission period only for a bona fide personal financial emergency. Storm damage that has to be repaired immediately is the classic accepted case. The waiver requires a dated, handwritten, signed statement from every consumer entitled to rescind, describing the specific emergency. Pre-printed waiver forms are prohibited, and lenders are conservative about waivers because a defective one can void the loan – most closers will decline to process one at all rather than risk the file.
HELOC-specific mechanics under § 1026.15
For a HELOC, the rescission right attaches once, at account opening. Individual draws on the line after that don’t carry a new three-day window. The notice you sign at HELOC opening is what triggers and closes the window. And if you want to reduce or close the line later, that’s a separate action under different Regulation Z provisions.
Right of rescission versus the TRID Closing Disclosure waiting period
Two three-day clocks live in the closing process, and borrowers routinely confuse them. TRID requires the lender to deliver the Closing Disclosure at least three business days before consummation, so you have time to review terms. Rescission is the separate three-business-day window after consummation. The first clock protects your review time. The second clock protects your ability to walk away. They don’t substitute for each other, and they use slightly different counting conventions.
Common mistakes that cost people the right
- Calling the loan officer to “cancel” instead of sending written notice
- Waiting for the lender to confirm receipt before mailing, when postmark controls
- Miscounting Saturday as excluded and missing the deadline by a day
- Assuming a purchase mortgage carries rescission rights, when it doesn’t
- Sending notice to the branch address instead of the address on the rescission form
When to call a lawyer
For an extended three-year claim, an H-8 versus H-9 wrong-form dispute, a materially inaccurate disclosure argument or a lender that refuses to honor a timely notice, retain a consumer-protection or real-estate attorney with TILA experience. For general escalation, the CFPB accepts consumer complaints at consumerfinance.gov/complaint. Some states layer additional cancellation rights on top of federal TILA, so confirm your state’s overlay with a local attorney before relying on the federal window alone.
FAQ
Does Saturday count in the 3-day right of rescission?
Yes. The rescission-day count includes Saturdays. Only Sundays and federal legal public holidays under 5 USC § 6103(a) are excluded.
What day does the rescission clock start?
Day 1 is the day after the latest of three events: you sign the credit contract, receive the material TILA disclosures and receive two copies of the rescission notice.
Can I rescind a home purchase mortgage?
No. TILA excludes purchase-money mortgages from the right of rescission. And this is the most common consumer misunderstanding of the rule.
Does rescission apply to a HELOC or only to home equity loans?
Both. A closed-end home equity loan is covered under § 1026.23. A HELOC is covered under § 1026.15 at account opening, though not on later draws.
What is the difference between Form H-8 and Form H-9?
Form H-8 is the general rescission notice for most covered transactions. Form H-9 is used for a same-creditor refinance where only new money is subject to rescission. Using the wrong form can extend the rescission window to three years.
What happens if I miss the midnight deadline?
The loan stands as signed. You lose the federal right to cancel and are bound by the terms. Only a disclosure defect that qualifies for extended rescission would revive the right.
What if the lender ignores my rescission notice?
Keep your proof of delivery and consult a consumer-protection attorney. You can also file a complaint with the CFPB at consumerfinance.gov/complaint. The Supreme Court in Jesinoski confirmed that the written notice itself is the operative act.
Does a reverse mortgage (HECM) have a right of rescission?
Generally yes for most HECM transactions on a principal residence, though program-specific mechanics apply. Ask the HUD-approved counselor and closer to confirm the exact window and delivery method for your file.
