After a mortgage closing occurs, the sale is final. You cannot cancel the mortgage once escrow closes unless you sell the home. However, homeowners who are refinancing using a different lender than their current lender have an opportunity to change their minds even after a closing. The cash-out portion of a cash-out refinance with the original lender also carries a right of rescission. The Truth in Lending Act includes a three-day rescission period for homeowners refinancing their primary home. The rescission period gives you a few extra days to mull over the decision before committing to the new loan terms. Secondary, vacation, and investment homes do not qualify for the rescission period.
Act within three business days from the date of the closing. Business days are considered Monday through Saturday. Sunday and Federal holidays are excluded. For example, if your closing is held Monday, the rescission period runs Tuesday, Wednesday and Thursday. The clock begins ticking at Tuesday 12:01 a.m. and ends Friday at 12:01 a.m.
Locate the Notice of Rescission in your loan documents. The notice states the procedure for rescinding the loan, including where to send the rescission letter. If you cannot find the notice, contact the lender for the fax or mailing address. The rescission period officially begins when your lender provides you the material disclosures and the proper Notice of Right to Rescind, which is part of the closing. If the lender does not give you these documents, the rescission period is extendable up to three years.
Write a letter to the lender stating you want to exercise your right to rescind. You do not have to give a reason for canceling the transaction. Include the property address, date of closing and your full name. Sign and date the letter.
Call the title company, title attorney, closing attorney, and any loan officers involved with the transaction to inform them you are rescinding.
Submit your letter to the lender. You can send the letter via U.S. mail, or private service, such as FEDEX, UPS or a messenger service. For proof of delivery, add signature confirmation or return receipt. The letter does not have to be received by the lender before the rescission period ends, but it must be sent during the rescission period. You can also fax the letter to the lender. If you are faxing the letter, follow-up with a phone call to ensure the letter was received and acknowledged. Document the name of the person who confirms the letter was received, along with the date and time of your phone call. Maintain the fax confirmation for your records.
Contact the lender to verify your loan was cancelled. Again, the lender does not have to grant permission for you to rescind the loan. Your written request is sufficient. Your original mortgage remains in effect as if nothing ever happened.