Does the right of rescission apply to refinances of residential mortgages by the same creditor?

The right of rescission, as outlined in Truth in Lending (Regulation Z), specifically applies to certain types of transactions involving the refinancing of residential mortgages. Generally speaking, the right of rescission allows borrowers to cancel certain transactions within a specific period, providing them an important safeguard.

In the case of refinances conducted by the same creditor, the right of rescission does not apply. This means that if a borrower is refinancing with the same lender, they do not have the same cancelation options that they might have with other types of transactions or with different lenders. This lack of rescission underscores important considerations for borrowers, as it places more responsibility on them to fully understand the terms of their refinancing before proceeding.

Other options hint at conditions that might imply a borrower could have rights that they, in fact, do not have under these circumstances. First-time borrowers or changes in rates do not influence the basic rules regarding the right of rescission for refinances with the same lender, keeping the framework clear about the protections intended by the regulation.