In a credit transaction in which a security interest is or will be retained or acquired in a consumer's principal dwelling, each consumer whose ownership is or will be subject to the security interest has the right to rescind the transaction. Lenders are required to deliver two copies of the notice of the right to rescind and one copy of the disclosure statement to each consumer entitled to rescind. The notice must be on a separate document that identifies the rescission period on the transaction and must clearly and conspicuously:
" disclose the retention or acquisition of a security interest in the consumer's principal dwelling;
" the consumer's right to rescind the transaction; and
" how the consumer may exercise the right to rescind with a form for that purpose.
Hawaii's Right to Rescind When Security Interest in Consumer's Principal Dwelling Is Involved — Rescission In Hawaii, the right to rescind is an important protection for consumers when a security interest is involved in their principal dwelling. Rescission refers to the act of canceling or undoing a contract or agreement, allowing the consumer to back out of a transaction within a specified time period without penalty. This right extends to various situations where the consumer's primary residence is used as collateral for a loan or other financial arrangement. Whether it's a mortgage, home equity loan, or a contract for deed, as long as the principal dwelling acts as security, the consumer has the right to rescind. The Hawaii Revised Statutes (HRS) provide detailed guidelines on the right to rescind and its specific requirements, giving consumers peace of mind and ensuring fair treatment. It is crucial to understand the different types of Hawaii's right to rescind, which are: 1. Mortgage Rescission: When a consumer obtains a mortgage loan, there is a three-business-day right to rescind, starting from the day the transaction closes or when the consumer receives the Truth in Lending Act (TILL) disclosure, whichever comes later. This provision primarily aims to protect homeowners from entering into high-risk or predatory lending practices. 2. Home Equity Loan Rescission: Similar to mortgage rescission, consumers who secure a home equity loan against their principle dwelling have the right to rescind the agreement within three business days after closing or upon receiving the TILL disclosure. This safeguard empowers homeowners in making informed decisions regarding their property's equity. 3. Contract for Deed Rescission: A contract for deed, also known as a land sale contract or installment contract, is a financing arrangement where the seller finances the purchase of the property directly to the buyer. In Hawaii, if the consumer's principal dwelling is involved in a contract for deed, they have a five-day right to rescind from the date they receive a copy of the contract. To exercise their right to rescind, consumers must notify the creditor or lender in writing within the specified time period, indicating their intention to cancel the transaction. It is advisable to send the notification via certified mail to have proof of delivery. Upon receiving the notice of rescission, the creditor or lender must take necessary actions, such as voiding the security interest, returning any payments made by the consumer, and releasing any recorded liens on the property, ensuring that the consumer's rights are fully protected. In conclusion, Hawaii's right to rescind when a security interest in the consumer's principal dwelling is involved provides crucial protection for homeowners and consumers. It allows individuals to reconsider their financial agreements and ensures fair treatment in various types of transactions like mortgages, home equity loans, and contracts for deeds. Understanding these rights empowers consumers to make informed decisions regarding their most significant investment — their home.
