For purposes of the right of rescission, when is the APR considered accurate if the disclosed finance charge is understated?

The accurate statement regarding the right of rescission is that the Annual Percentage Rate (APR) is considered accurate if the disclosed finance charge is understated by no more than 1/2 of 1% of the face amount of the note or $100.

This provision allows for a certain tolerance in the disclosure of the finance charge to ensure that minor discrepancies do not lead to penalties or rescission rights for the borrower. The intent is to provide consumers with meaningful and clear information while recognizing that minor errors may occur.

An understatement that falls within this tolerance does not trigger the right of rescission because it does not significantly affect the consumer's understanding of the cost of the loan. Therefore, if the understatement is up to this specified threshold, the disclosures can still be considered compliant with Regulation Z requirements.