Truth In Lending Act Definition
Also known as the Consumer Protection Act, legislation enacted in 1968 requiring money lenders to be explicit about the true costs of credit transactions. You can CANCEL a Home Equity Loan via the Truth In Lending Act. You have a Three Day Window to cancel your Home Equity Loan!
The Truth in Lending Act required lenders to disclose the terms and costs of their home equity plans, including the annual percentage rate, points, and fees. In general, neither the lender nor anyone else may charge a fee until you have received this information.
Lenders who advertise must meet Truth in Lending Act disclosure requirements with respect to loan rate and terms. The main point of interest to the borrower is that the Truth in Lending Act provides them with the right to cancel certain real estate lending transactions within three days.
You Have 3 Days to Cancel A Home Equity Loan
When you open a home equity loan, the transaction puts your home at risk because if you default on the loan, the lender could foreclose on it. For your principal residence, the “Truth in Lending Act” gives you three days from the day the account was opened to cancel the credit line. This right allows you, the homeowner, to change your mind for any reason. Maybe you found better terms or simply got cold feet. Whatever the reason you have the right to cancel the home equity loan via the Truth In Lending Act. The creditor must then cancel the security interest in your home and return all fees – including any application and appraisal fees – paid in opening the account.
How To Cancel Home Equity Loan
If you do decide to exercise your right of rescission via the Truth In Lending Act, you must inform the creditor in writing within that three day period. You may not rescind by telephone or in a face-to-face conversation with the creditor. You written notice must be mailed, filed for telegraphic transmission, or delivered if by other written means, before midnight of the third business day.
The creditor must then cancel the security interest in your home and return all fees paid to open the account. Be sure your notice is delivered before midnight of the third business day.
For rescission purposes, business days include Saturdays but not Sundays or legal public holidays.
Once you cancel the contract, the security interest in your home is also cancelled, and you are not liable for any amount, including the finance charge. The creditor has 20 days to return all money or property you paid as part of the transaction and release any security interest in your home. If you received money or property from the creditor, you may retain it until the creditor shows that your home is no longer being used as collateral and returns any money you have paid. Then, you must offer to return the creditor’s money or property. If the creditor does not claim the money or property within 20 days, you may keep it.
To lean more about the Truth in Lending Act, you can visit the Wikipedia page with a more detailed overview of this topic.