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.
Massachusetts Right to Rescind When Security Interest in Consumer's Principal Dwelling is Involved — Rescission In Massachusetts, the Right to Rescind is a legal provision that grants consumers the ability to cancel or "rescind" certain types of agreements that involve a security interest in their principal dwelling. This is an important safeguard designed to protect homeowners who may have entered into agreements that could potentially jeopardize their homeownership. When a security interest in a consumer's principal dwelling is involved, there are various circumstances under which the Right to Rescind may be applicable. These circumstances can be broadly categorized into three types: 1. Mortgage Refinance Rescission: When a homeowner decides to refinance their mortgage, they have a right to rescind the agreement within three business days from the date of the transaction. This gives them the opportunity to reconsider their decision and ensure that the terms of the refinancing align with their financial objectives and needs. 2. Home Equity Loan or Line of Credit Rescission: If a consumer obtains a home equity loan or opens a home equity line of credit (HELOT), they have the right to rescind the agreement within three business days after both the consummation of the transaction and the receipt of "Truth in Lending Act" (TILL) disclosures. This provision allows homeowners to carefully review the terms and conditions of the loan or line of credit before finalizing the agreement. 3. Loan Modification Rescission: In situations where a loan modification is offered to a homeowner, they have the right to rescind the modified loan agreement within three business days. This ensures that homeowners are not forced into unfavorable modifications and have the opportunity to seek better terms or consult financial advisors for guidance. The Right to Rescind provides a critical safety net to Massachusetts homeowners who may receive inadequate disclosures or be pressured into agreements that may not be in their best interest. It empowers homeowners to reevaluate their choices and make informed decisions regarding their mortgage refinancing, home equity loans, or loan modifications, without the fear of losing their principal dwelling. To exercise the Right to Rescind, homeowners must provide written notice of their intention to rescind to the lender or loan service within the specified timeframe. Failure to adhere to the correct procedure may invalidate the rescission. It's important for Massachusetts homeowners to be aware of their rights and seek legal advice if they believe the terms of a security interest in their principal dwelling are unfair or not properly disclosed. Rescission serves as a vital tool for protecting homeowners from predatory lending practices and ensuring a fair and transparent lending environment.
