12 C.F.R. § 226.15

Right of rescission

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(a) Consumer's right to rescind. (1)(i) Except as provided in paragraph (a)(1)(ii) of this section, in a credit plan in which a security interest is or will be retained or acquired in a consumer's principal dwelling, each consumer whose ownership interest is or will be subject to the security interest shall have the right to rescind: each credit extension made under the plan; the plan when the plan is opened; a security interest when added or increased to secure an existing plan; and the increase when a credit limit on the plan is increased.

(ii) As provided in section 125(e) of the Act, the consumer does not have the right to rescind each credit extension made under the plan if such extension is made in accordance with a previously established credit limit for the plan.

(2) To exercise the right to rescind, the consumer shall notify the creditor of the rescission by mail, telegram, or other means of written communication. Notice is considered given when mailed, or when filed for telegraphic transmission, or, if sent by other means, when delivered to the creditor's designated place of business.

(3) The consumer may exercise the right to rescind until midnight of the third business day following the occurrence described in paragraph (a)(1) of this section that gave rise to the right of rescission, delivery of the notice required by paragraph (b) of this section, or delivery of all material disclosures, 36 whichever occurs last. If the required notice and material disclosures are not delivered, the right to rescind shall expire 3 years after the occurrence giving rise to the right of rescission, or upon transfer of all of the consumer's interest in the property, or upon sale of the property, whichever occurs first. In the case of certain administrative proceedings, the rescission period shall be extended in accordance with section 125(f) of the Act.

36 The term material disclosures means the information that must be provided to satisfy the requirements in § 226.6 with regard to the method of determining the finance charge and the balance upon which a finance charge will be imposed, the annual percentage rate, the amount or method of determining the amount of any membership or participation fee that may be imposed as part of the plan, and the payment information described in § 226.5b(d)(5)(i) and (ii) that is required under § 226.6(e)(2).

(4) When more than one consumer has the right to rescind, the exercise of the right by one consumer shall be effective as to all consumers.

(b) Notice of right to rescind. In any transaction or occurrence subject to rescission, a creditor shall deliver two copies of the notice of the right to rescind to each consumer entitled to rescind (one copy to each if the notice is delivered in electronic form in accordance with the consumer consent and other applicable provisions of the E-Sign Act). The notice shall identify the transaction or occurrence and clearly and conspicuously disclose the following:

(1) The retention or acquisition of a security interest in the consumer's principal dwelling.

(2) The consumer's right to rescind, as described in paragraph (a)(1) of this section.

(3) How to exercise the right to rescind, with a form for that purpose, designating the address of the creditor's place of business.

(4) The effects of rescission, as described in paragraph (d) of this section.

(5) The date the rescission period expires.

(c) Delay of creditor's performance. Unless a consumer waives the right to rescind under paragraph (e) of this section, no money shall be disbursed other than in escrow, no services shall be performed, and no materials delivered until after the rescission period has expired and the creditor is reasonably satisfied that the consumer has not rescinded. A creditor does not violate this section if a third party with no knowledge of the event activating the rescission right does not delay in providing materials or services, as long as the debt incurred for those materials or services is not secured by the property subject to rescission.

(d) Effects of rescission. (1) When a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void, and the consumer shall not be liable for any amount, including any finance charge.

(2) Within 20 calendar days after receipt of a notice of rescission, the creditor shall return any money or property that has been given to anyone in connection with the transaction and shall take any action necessary to reflect the termination of the security interest.

(3) If the creditor has delivered any money or property, the consumer may retain possession until the creditor has met its obligation under paragraph (d)(2) of this section. When the creditor has complied with that paragraph, the consumer shall tender the money or property to the creditor or, where the latter would be impracticable or inequitable, tender its reasonable value. At the consumer's option, tender of property may be made at the location of the property or at the consumer's residence. Tender of money must be made at the creditor's designated place of business. If the creditor does not take possession of the money or property within 20 calendar days after the consumer's tender, the consumer may keep it without further obligation.

(4) The procedures outlined in paragraphs (d)(2) and (3) of this section may be modified by court order.

(e) Consumer's waiver of right to rescind. (1) The consumer may modify or waive the right to rescind if the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency. To modify or waive the right, the consumer shall give the creditor a dated written statement that describes the emergency, specifically modifies or waives the right to rescind, and bears the signature of all the consumers entitled to rescind. Printed forms for this purpose are prohibited, except as provided in paragraph (e)(2) of this section.

(2) The need of the consumer to obtain funds immediately shall be regarded as a bona fide personal financial emergency provided that the dwelling securing the extension of credit is located in an area declared during June through September 1993, pursuant to 42 U.S.C. 5170, to be a major disaster area because of severe storms and flooding in the Midwest. 36a In this instance, creditors may use printed forms for the consumer to waive the right to rescind. This exemption to paragraph (e)(1) of this section shall expire one year from the date an area was declared a major disaster.

36a A list of the affected areas will be maintained by the Board.

(3) The consumer's need to obtain funds immediately shall be regarded as a bona fide personal financial emergency provided that the dwelling securing the extension of credit is located in an area declared during June through September 1994 to be a major disaster area, pursuant to 42 U.S.C. 5170, because of severe storms and flooding in the South. 36b In this instance, creditors may use printed forms for the consumer to waive the right to rescind. This exemption to paragraph (e)(1) of this section shall expire one year from the date an area was declared a major disaster.

36b A list of the affected areas will be maintained and published by the Board. Such areas now include parts of Alabama, Florida, and Georgia.

(4) The consumer's need to obtain funds immediately shall be regarded as a bona fide personal financial emergency provided that the dwelling securing the extension of credit is located in an area declared during October 1994 to be a major disaster area, pursuant to 42 U.S.C. 5170, because of severe storms and flooding in Texas. 36c In this instance, creditors may use printed forms for the consumer to waive the right to rescind. This exemption to paragraph (e)(1) of this section shall expire one year from the date an area was declared a major disaster.

36c A list of the affected areas will be maintained and published by the Board. Such areas now include the following counties in Texas: Angelina, Austin, Bastrop, Brazos, Brazoria, Burleson, Chambers, Fayette, Fort Bend, Galveston, Grimes, Hardin, Harris, Houston, Jackson, Jasper, Jefferson, Lee, Liberty, Madison, Matagorda, Montgomery, Nacagdoches, Orange, Polk, San Augustine, San Jacinto, Shelby, Trinity, Victoria, Washington, Waller, Walker, and Wharton.

(f) Exempt transactions. The right to rescind does not apply to the following:

(1) A residential mortgage transaction.

(2) A credit plan in which a state agency is a creditor.

[Reg. Z, 46 FR 20892, Apr. 7, 1981, as amended at 54 FR 24688, June 9, 1989; 58 FR 40583, July 29, 1993; 59 FR 40204, Aug. 5, 1994; 59 FR 63715, Dec. 9, 1994; 66 FR 17338, Mar. 30, 2001; 72 FR 63474, Nov. 9, 2007]

Notes of Decisions

Cited in 55 cases (2 in the last 5 years), 1979–2025 · leading case: Burson v. Capps, 102 A.3d 353 (Md. 2014).

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Burson v. Capps, 102 A.3d 353 (Md. 2014). · cites it 11× “12 C.F.R. § 226.15 (a) (2013). 2 Endeavor Mortgage Group—a loan broker—to EquiFirst Corporation.”

Peter M. Gaona Annah M. Gaona v. Town & Country Credit the Chase Manhattan Bank, 324 F.3d 1050 (8th Cir. 2003). · cites it 3× “12 C.F.R. § 226.15 (b) (2002). This notice should include the date that the rescission period ends.”

Albert E. Thomka v. A. Z. Chevrolet, Inc, 619 F.2d 246 (3rd Cir. 1980). · cites it 3× “§ 1667a; 12 C.F.R. § 226.15 (a). The disclosures can be included within the lease agreement itself or on a separate document.”

Fernandes v. JPMorgan Chase Bank, N.A., 818 F. Supp. 2d 1086 (N.D. Ill. 2011). · cites it 10× “) Chase argues that Fernandes’ claims should be dismissed because they are barred by the P & A Agreement, “which explicitly states that Chase is not subject to liability for WaMu borrower claims arising before that date.”

Horton v. California Credit Corp. Ret. Plan, 835 F. Supp. 2d 879 (S.D. Cal. 2011). · cites it 6× “§ 1635 (a); see also 12 C.F.R. § 226.15 (a). While the borrower’s right of rescission must normally be exercised within a three-day period, TILA extends that period to three years under certain circumstances.”

Bill Chapman v. JPMorgan Chase Bank, N.A., 651 F. App'x 508 (6th Cir. 2016). · cites it 2× “§ 1635 (a); 12 C.F.R. § 226.15 (a)(2), and they still must exercise their rights within the statutory time frame, see 15 U.”

Agustin v. PNC Fin. Servs. Grp., Inc., 707 F. Supp. 2d 1080 (D. Haw. 2010). · cites it 3× “§ 1635 (b); 12 C.F.R. § 226.15 (d)(1). After the transaction is rescinded, the creditor must tender any money or property given to anyone in connection with the transaction within a specified time frame.”

Meyer v. Argent Mortg. Co. (In Re Meyer), 379 B.R. 529 (Bankr. E.D. Pa. 2007). · cites it 2× “12 C.F.R. § 226.15 (b) (emphasis added). In disputing Plaintiffs’ claim, the Defendants rely yet again on the copy of the Notice of Right to Cancel in their possession.”

Rodrigues v. Members Mortg. Co., Inc., 323 F. Supp. 2d 202 (D. Mass. 2004). · cites it 2× “12 C.F.R. §§ 226.15 (2004). TILA provides in relevant part: [I]n the case of any consumer credit transaction .”

McNerney v. Rescap Borrower Claims Trust (In re Residential Capital, LLC), 563 B.R. 477 (S.D.N.Y. 2016). “§ 1635 (a), but where the lender has made deficient disclosures at the time of the transaction, the borrower’s right to rescind is extended until three years after the transaction’s consummation.”

E. Sav. Bank, FSB v. Esteban., 296 P.3d 1062 (Haw. 2013). “12 C.F.R. § 226.15 (a)(3) (emphasis added).”

Amonette v. Indymac Bank, F.S.B., 515 F. Supp. 2d 1176 (D. Haw. 2007). · cites it 2× “12 C.F.R. § 226.15 (a) (emphases added). Some official commentary from the Federal Reserve Board is also useful.”

Show all 55 citing cases →

— 12 C.F.R. § 226.15(4)(f) — 1 case

Ass'n of Credit Consumers, Inc. v. Dep't of Banking & Fin., 25 Fla. Supp. 2d 261 (Fla. Div. Admin. Hr'g 1986).

— 12 C.F.R. § 226.15(a) — 1 case

Thomka v. A. Z. Chevrolet, Inc., 469 F. Supp. 580 (W.D. Pa. 1979).

— 12 C.F.R. § 226.15(a)(3) — 1 case

Feinerman v. Barrett, 673 A.2d 1341 (Me. 1996).

— 12 C.F.R. § 226.15(a)(l)(i) — 1 case

Kuechler v. Peoples Bank, 602 F. Supp. 2d 625 (D. Maryland 2009).

— 12 C.F.R. § 226.15(b) — 2 cases

Meyer v. Argent Mortg. Co. (In Re Meyer), 379 B.R. 529 (Bankr. E.D. Pa. 2007). “12 C.F.R. § 226.15 (b) (emphasis added). In disputing Plaintiffs’ claim, the Defendants rely yet again on the copy of the Notice of Right to Cancel in their possession.”

Helbling v. Fox (In Re Fox), 391 B.R. 772 (Bankr. N.D. Ohio 2008).

— 12 C.F.R. § 226.15(b)(3) — 1 case

Rodrigues v. Members Mortg. Co., Inc., 323 F. Supp. 2d 202 (D. Mass. 2004). “12 C.F.R. §§ 226.15 (2004). TILA provides in relevant part: [I]n the case of any consumer credit transaction .”

— 12 C.F.R. § 226.15(c) — 1 case

Gonzalez Fin. Holdings, Inc v. Willie Moore, Thelma Moore, & Unity Nat'l Bank (Tex. App. 2010).

— 12 C.F.R. § 226.15(e) — 1 case

Feinerman v. Barrett, 673 A.2d 1341 (Me. 1996).

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