 Dear
Steve,
Does the three-day "right of rescission" include weekends, or is it just three business days? To what real estate transactions does it apply?
-- G. Applebee
 Dear
G.,
I am pretty sure you are referring to the three-day rescission period sanctioned by the Truth in Lending Act, which was designed to protect consumers from getting fleeced out of their homes by unscrupulous lenders.
This federal law, designed to give borrowers a "cooling off" period to make sure their loans are exactly what they were expecting, does not apply to mortgages used to purchase property. It applies only to borrowers who are refinancing or receiving a home equity loan or line of credit and are using their principal residence as collateral to secure it.
However, there are similar cooling-off periods in time share purchases and other real estate transactions that are also referred to as "rescission" periods. These generally fall under the authority of state laws, not federal laws. I'll touch on these later.
Under the federal rescission law, the clock starts ticking at midnight on the day of closing and spans three full business days from there, or 72 hours. With the exception of Sunday, every day of the week is considered a business day, including Saturday, even if your lender's office is closed on that day.
An exception is if a federal holiday occurs in that stretch, which would add another 24 hours. In other words, if you close on Monday, your loan would not fund until Friday. If you closed on Thursday, then it would not fund until Tuesday. But if you closed on the Thursday before Memorial Day or another holiday, you would have one extra day to cancel. Some states have slightly longer rescission periods.
In a rescission, you must notify the lender in writing of your intent to cancel. A phone call or visit to the loan office will not suffice. This notification letter must be mailed before midnight of the third business day following closing. The lender will then be obligated to return, within 20 calendar days, all fees or collateral given by you in connection with the loan. For peace of mind, readers, please send that letter by registered mail.
Now back to other rescission laws:
Most states offer some kind of "cooling off" protection
to buyers of time shares, condos and residential
lots.
These protections vary widely but usually range from five to as many as 15 days. Typically, they use the same business clock we discussed earlier.
Tip: If a rescission or cooling-off
period is not required by law in the state where
the real estate purchase you are pondering will
occur, simply ask to have one included in your
loan contract. Of course, it's always best to
know exactly what you're signing so you won't
have to rush to beat the rescission clock.
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