This is the second post in a 3 part series that will discuss how the Truth in Lending Act address the right of rescission.

Grounds for Extended Rescission

As noted previously, the right to rescind normally lasts 3 days after consummation of the transaction, but can be extended for up to 3 years if the creditor fails to give the consumer all material disclosures or fails to provide proper notice of the right to rescind. For closed-end credit, the material disclosures are defined as the annual percentage rate, the finance charge, the amount financed, the total of payments, and the payment schedule. 12 C.F.R. § 226.23. In addition, if the loan is a high rate loan covered by HOEPA, failure to make the special “advance look” disclosures or inclusion of a prohibited term extends the rescission period.

The creditor must give each consumer 2 copies of a notice of the right to rescind. The Federal Reserve Board’s regulations specify the content of this notice. Many courts have held that errors of omissions in the notice, or failure to provide the proper number of copies, extends the right to rescind.