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.
Title: Understanding Pennsylvania's Right to Rescind when a Security Interest in a Consumer's Principal Dwelling is Involved Introduction: Pennsylvania recognizes the importance of consumer protection when it comes to loans involving a consumer's principal dwelling. The Right to Rescind, also known as rescission, provides consumers with the ability to cancel certain loan agreements within a specific timeframe. This article will delve into the details of Pennsylvania's Right to Rescind when a security interest in a consumer's principal dwelling is involved, highlighting the types of rescission applicable in the state. 1. Definition of Rescission: Rescission is a legal right that allows consumers to cancel or rescind certain loan agreements involving the security interest in their primary residence. 2. Applicability of Pennsylvania's Right to Rescind: This right to rescind applies specifically to loans secured by a mortgage or lien on a consumer's principal dwelling, such as home equity loans, mortgages, or refinancing agreements. 3. Timeframe to Exercise the Right: Under federal law, Pennsylvania consumers have a three-business-day period to exercise their right to rescind after the consummation of the loan agreement. However, state-specific regulations may provide additional protections, extending the rescission period. 4. Additional Rescission Timeframes Based on Circumstances: In certain circumstances, Pennsylvania provides extended right to rescind periods beyond the initial three-business-day timeframe: a) Rescission of Home Improvement Contracts: Pennsylvania law grants consumers the right to rescind home improvement contracts within three business days of signing the contract, regardless of whether the loan is secured by the consumer's principal dwelling. b) Rescission of High-Interest Loans (Alternative Mortgage Transactions): Pennsylvania recognizes a seven-business-day right to rescind for high-interest loans, also known as alternative mortgage transactions, exceeding the amount allowed under state usury laws. c) Rescission Period for Violations: If a lender fails to provide certain disclosures, such as the Required Notice of Right to Cancel form, consumers retain the right to rescind for up to three years. 5. Procedure to Exercise the Right to Rescind: To exercise the right to rescind, consumers must inform the lender in writing within the specified timeframe, clearly expressing their intent to cancel the loan agreement. The notice should include information like the consumer's name, address, loan details, and the date of rescission. 6. Consequences of Rescission: Upon valid rescission, both parties must return any money or property exchanged during the loan transaction. The lender must also release any security interest held on the consumer's principal dwelling. Conclusion: Pennsylvania's Right to Rescind offers crucial protection for consumers, particularly when their principal dwelling is involved as a security interest. By understanding the various types of rescission and the importance of adhering to the specified timeframe, Pennsylvania residents can assert their rights and make informed decisions when entering into loan agreements.
