It is critical to correctly complete all dates on the Notice of Right to Cancel (NRTC) and assure that the notice is properly signed. The below instructions provide general guidance regarding the preparation of the NRTC. Click here for the model form that the below numbers 1-5 correspond to. Items 6-8 provide general information regarding this subject matter.
1. For the date of the transaction, enter the date on which the borrower(s) sign the Mortgage or Deed of Trust.
2. Enter the name and address of the lender where the borrower can notify the lender in writing, if the borrower decides to cancel.
3. Under the cancellation date, enter the date on which the rescission period will expire. To calculate this date, add three business days (do not count Sundays or legal public holidays) to the latest of the events referenced in the NRTC.
4. Each person receiving the NRTC must sign and date the form. Also, each party must receive two copies of the NRTC with the appropriate date of the transaction and expiration date.
5. The correct NRTC form must be used, which is determined by the type of transaction. For more detailed information about what is required, for closed-end loans click here and for open-end loans click here.
6. If this notice is not prepared correctly (e.g., dates are missing or incorrect), the rescission right may extend for a period up to three (3) years. To cure this rescission liability, creditor must re-open rescission and complete all of the steps that are required for a NRTC.
7. If there are multiple parties who sign on different dates, the latest date is used when calculating the rescission period. It is best to have multiple parties sign on the same day.
8. The loan may not fund until the last rescission period has expired.
DSI's Compliance Department invites you to review our other articles on the Notice of Right to Cancel:
12 CFR § 226.23(c); 12 CFR § 226.15(c)
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