Right of Rescission after Three-Year Expiration

January 5, 2023 QUESTION We sued a borrower for defaulting on a residential mortgage loan after the 3-year extended rescission period had expired. The borrower countersued us by claiming they had the right of rescission by way of recoupment even after the lapse of the 3-year period. They say there was a material violation of TILA, so their right to rescind is allowed.  This lawsuit is with our lawyer. I'm not a lawyer, but I know when I'm being conned. This makes no sense. I don't see how the borrower can open up rescission on us - and we're not even the original owner of the mortgage. The original owner had the loan for years. Maybe you can get me through all the legalese. I've never encountered this situation before. I asked our attorney to phrase the question I should be asking you. Here it is.  May a borrower assert the right of rescission by way of recoupment even after the lapse of the three-year period, assuming a material TILA violation by the creditor, if the borrower did not previously assert that right? ANSWER This is a good question, as it frames the context of the TILA issue. We will need a little legalese, but I will clarify the terms and implications for you.  Let's go to a working definition of the so-called "Right to Cancel." Briefly put, for any credit transaction in which a security interest is or will be retained or acquired in a consumer's principal dwelling, TILA, and Regulation Z, give each consumer residing in the dwelling whose ownership interest is or will be subject to the security interest the right to rescind the transaction. That's a mouthful! It is important to understand, too, that the rescission right does not apply to transactions expressly exempted by Regulation Z, such as residential mortgage transactions (purchase money transactions) and in those rare instances when the consumer has appropriately waived the right to rescind. FEATURED  COMPLIANCE TUNE-UP QC TUNE-UP MORTGAGE QUALITY CONTROL

Jonathan Foxx, Ph.D., MBA Chairman & Managing Director CONTINUOUS COMPLIANCE Monthly or Hourly Compliance Request List Pioneering Mini-Audits Request List Policies & Procedures Request List Compliance Solutions FEATURED COMPLIANCE SOLUTION SERVICING QUALITY CONTROL Speak to an Expert Contact Us Send an Email Ask a Question

Did You Know? What are the 5 objectives of the CFPB? Request Compliance Solutions (1) Consumers are provided with timely and understandable information to make responsible decisions about financial transactions; (2) Consumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination; (3) Outdated, unnecessary, or unduly burdensome regulations are regularly identified and addressed in order to reduce unwarranted regulatory burdens; (4) Federal consumer financial law is enforced consistently, without regard to the status of a person as a depository institution, in order to promote fair competition; and (5) Markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation.

The most comprehensive mortgage compliance solutions in the United States.

Member of National Organizations ABA | MBA | NAMB | AARMR | MISMO | ARMCP | ALTA | IIA | ACAMS | MERSCORP