How long does a creditor have to return any money related to a rescission?

When a consumer exercises their right to rescind a mortgage loan under the Truth in Lending Act (TILA), the creditor is required to return any money that the borrower paid in connection with the transaction. The timeframe for this refund is crucial for ensuring that consumers are treated fairly after exercising their rights.

The correct time frame for the creditor to return any funds is 20 calendar days. This stipulation is put in place to ensure that consumers are not left waiting for extended periods after they have made the decision to rescind their loan agreement. By requiring the refund within 20 calendar days, it helps facilitate a smoother transition for the borrower back to their financial state prior to the loan.

Understanding this is important for anyone functioning within mortgage lending, as compliance with rescission rules and timelines is a critical part of the regulatory landscape governing lending practices.