Residential Finance: TRID Right of Rescission

Summary

This practice note explains a consumer's right to rescind certain loan transactions secured by the consumer's principal dwelling. This right is often generally referred to as the "three-day right of rescission" and arises pursuant to the Truth-in-Lending-Act (TILA) and Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure rule also known as TRID or the "Know Before You Owe" Act. 12 C.F.R. Ch. X, Pt. 1024 and 1026. Though the right of rescission applies to a number loan types, most consumers encounter it when refinancing a loan secured by their primary residence with a new lender or obtaining a home equity line of credit. TRID does not provide a three-day right of rescission for a residential purchase money mortgage.