====== Rescission ======

**Rescission** is the **legal right to cancel a contract** and restore the parties to their **original positions** as if the contract never existed.

===== Key Characteristics =====
  * Voids the contract
  * Returns money and property to original owners
  * Must be exercised within a **specific time period**
  * Often applies to **consumer protection laws**

===== Rescission Under TILA =====
  * Applies to **refinances** of a **principal residence**
  * Borrower has **3 business days** to rescind
  * Does **not** apply to:
    * Purchase loans
    * Investment properties
    * Second homes

===== How the 3-Day Period Works =====
  * Clock starts after the **last** of:
    * Loan closing
    * Receipt of TILA disclosures
    * Receipt of notice of right to rescind
  * Includes Saturdays, excludes Sundays and federal holidays

===== Effects of Rescission =====
  * Loan is canceled
  * Lender must return fees
  * Borrower returns loan proceeds (if received)

===== Rescission vs Cancellation =====
  * **Rescission**
    * Based on statute or law
    * Automatic right within timeframe

  * **Cancellation**
    * Based on contract terms

===== Exam Tip =====
  * Remember **3 business days**
  * Applies only to **owner-occupied refinances**