Question

A home improvement company was negotiating with a home owner to add two rooms onto a home. The company agreed to take a second mortgage as long as the homeowner also included the rest of the property in the loan. The company and the homeowner agreed to a price and the company provided the necessary disclosure form on Monday and the homeowner signed the agreement at noon the following day. Assuming that the week had five business days, until what time could the homeowner rescind the loan?
A: Tuesday, midnight
B: Thursday, midnight
C: Friday, midnight
D: There is no rescission on a house.

Answer 1

Answer:

Friday, midnight

Explanation:

According to federal law the right of rescission applies only to the refinancing of a mortgage. These laws do not apply to the purchase of a new home. If a borrower has the intentiom to cancel a loan, he must do so at the latest at midnight of the third day , that is once the completion of the refinancing, including having received a mandatory Truth in Lending disclosure from the lender and two copies of a notice advising him of his right to rescind. this case,

The loan documents were signed a Tuesday, the borrower has until Friday, midnight to cancel transaction. This is his/her right to rescission.

Answer 2

Answer:

C) Friday, midnight

Explanation:

In this case, the homeowner is considered a borrower, and federal law gives borrowers three full business days after signing mortgage documents to rescind any loan. Since the loan documents were signed a Tuesday, the borrower has until Friday, midnight to cancel any deal (3 days = Wednesday, Thursday and Friday).