What is the duration of the right of rescission applicable to second mortgages?

The right of rescission pertains to certain types of loans, particularly when a consumer is taking out a second mortgage or any loan secured by their home. Under the Truth in Lending Act (TILA), borrowers have the right to rescind or cancel certain credit transactions in which their residence is used as collateral for the loan.

For second mortgages, the duration of the right of rescission is three business days, which is the correct answer. This time frame allows borrowers to have a period during which they can reconsider the loan agreement and back out if they decide that the terms are not favorable or if they need more time to analyze the impact of their decision. The right of rescission is designed to protect consumers from making hurried decisions that could lead to unfavorable financial situations.

In the context of the other answer options, while seven days, ten days, and thirty days might sound reasonable for different credit transactions, the specific regulation regarding second mortgages clearly designates the three-day period as the applicable duration for the right of rescission. This highlights the importance of knowing the specific timelines dictated by federal law when dealing with real estate transactions.