Understanding the Purpose and Aspects of the Notice of Right to Cancel Form
The Notice of Right to Cancel form serves a crucial role in mortgage transactions under federal law. It grants borrowers a right of rescission, allowing them 3 business days to review and potentially cancel the transaction after signing the loan document package. The rescission period begins on the first business day post-signing and concludes at midnight on the third business day, excluding Sundays and federal holidays.
This form, alternatively titled "Notice of Right of Rescission" or "Notice of Your Right to Cancel Credit Transaction Secured by Your Home," is provided to borrowers in specific loan scenarios. Refinance loans with a change in lenders, home equity loans, lines of credit, and certain "cash-out" refinance loans involve this notice. However, it is not applicable to purchase loans, refinance loans with the same lender, state agency loans, and loans for non-primary residences.
Despite its significance, the Notice of Right to Cancel form does not require notarization. The Signing Agent's role involves printing two copies for each borrower, along with an extra copy for signing during the appointment. If the applicable dates are preprinted, the Signing Agent must verify their accuracy using a rescission calendar. If not preprinted, the Agent completes the form with the correct dates using the same resource. This process ensures compliance and clarity in informing borrowers of their right to rescind the loan within the specified period.