Right to Cancel

I WISH TO CANCEL…. Escrow Officers/Closing Agents can’t stop the groan of frustration when we receive a Borrower’s signature on that line of the Notice of Right to Cancel form. Under the Federal Truth in Lending Act of 1968 (TILA), Borrowers who are refinancing their home have the right to change their minds and stop the refinance within 3 business days after they sign their loan documents. This is to prevent “Borrower’s remorse”, giving Borrowers a chance to back out of the transaction if they have been forced into it without proper thought.

The “Rescission Period”, as it is called, starts the day after the loan documents are signed and it ends at midnight of the third business day, not counting certain federal holidays and Sundays. For example, if the documents are signed on April 28, 2011, the 3 business days (excluding Sunday) would end midnight of May 2nd. The Lender cannot release the loan funds until May 3rd and the actual closing would then be scheduled for May 4th.

Given how everyone wants to close their transaction by the end of the month, that last day for signing pending the final rescission date is the busiest day for Escrow Officers. For instance, in order to close by May 31st, documents would have to be signed by May 23rd due to the holiday on May 30th. In June, the last day to sign will be June 24th.

Now there are instances of loan officers and Borrowers requesting the Escrow Officer or the Notary Public to date the signatures to an earlier date than the actual signing date. Let me remind all that this is a violation of Notarial Law and an absolute no-no. Documents are to be dated the actual date that it is signed and doing it otherwise could land the Borrower, Notary Public, Escrow Officer and Loan Broker in a lot of hot water.

Once the Escrow Holder gets the “I Wish To Cancel” it generally means that all the hard work put in by the Mortgage Broker, Loan Officer, and Escrow Officer are in vain. It is rare that they are compensated for time and service rendered, and especially for the mobile Notary Publics, who won’t get paid for traveling to the Borrower’s location and spending hours signing them up.

Our request to Borrowers: If you are unsure about the loan, resolve the issues prior to the loan documents being drawn and especially prior to signing them. That will save a lot of unnecessary work for all included, even the Borrower.