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October 16, 2014

The Right to Cancel done Wrong

The Right to Cancel done Wrong
It’s easy to make errors on the Right to Cancel, also known as the Right of Rescission form. Unfortunately this form must be free of errors prior to funding. There are several ways to make a mess of it. This entry will cover a few of the more common errors; I’m sure some creative notaries out there will comment on the aspects that I neglected to mention.

Perhaps the most blatant error is to have to applicant sign in the “I wish to Cancel” area and not on the “I received two copies” area. Sounds silly? But, it does happen. This is a real show stopper as escrow and lending are faced with a cancellation that they cannot ignore! You cannot just line thru to improper signature (redact/initial) and have them sign in the proper place, the page must be replaced and signed *only* in the proper place.

“Three Business Days” that’s the standard. But, like so many things that sound simple it has some not so obvious gotchas. Those three days, when crossing a Saturday, have different meanings to different lenders. Thus, that “right of rescission” calendar that you carry stands a good chance of being wrong. Some count Saturday as one of the three days, some don’t. Of course if it’s filled in, along with the correct signing date; no problem. But to be sure, when a Saturday is involved you have to ask the proper authority for them to supply the end date of the rescission period. Your calendar “might” be wrong!

Each borrower is supposed to receive two *executed* copies of the RTC. They are not executed by merely being in the borrower document set. It is required that you “fish out” these pages and have the borrower(s) sign as received and the proper dates are on the top portion of the forms. You don’t do that? You have done many packages without a problem. Well, if you want to be a perfectionist, leave the borrower(s) executed copies (2). Often there will be only one RTC per borrower – so go the extra mile and be sure to return two executed per borrower with the docs.

Sometimes the signing gets pushed back a day or so. The RTC must be changed to reflect the new signing date and the correct end of the RTC. If there are preprinted entries they get a thin line thru them and the borrower initials the end of the line, not you! Then, the correct dates are entered, neatly please. The same procedure for the borrower copies. Two borrowers? You need to correct and have signed four forms. It’s a good idea to print a few spare forms…..

On rare occasions I have been asked to have the borrower(s) *only* initial the date areas that will need to be changed, with no dates entered. I do not feel comfortable with this. However, if you do this; be sure to do exactly the same process on the borrower(s) copy.

Often the “checklist” will mention the RTC but it will not be included in the package. It’s only relevant when the security for the loan is the borrower’s primary residence. Thus, if the property in question is for investment or a second home; there will be no applicable RTC forms.

Always pay extra close attention to the RTC, it’s a federally mandated form and must be perfect or you will get a request to visit the borrower again. This is the one case where you cannot swap out the borrower copy page to correct a flaw; as that page too must be perfect.

You might also like:

The 3 days to rescind

The 30 point course’s guide to the Right to Rescind

Index of information about documents



  1. Actually, there is no need to ever change the dates on the ROTC, since the form is self-correcting. If you read the choices, the borrower need only put the correct date on the form when acknowledging the receipt of the form. The date that begins the three days is:
    1. the date shown on the form, OR
    2. the date that the borrower receives the ROTC, OR
    3. the date that the borrower receives the TIL, which ever is later.
    I don’t think most title company personnel or loan officers have ever really read the ROTC and understand this feature.

    Just a thought.

    Comment by Bob Wells — November 3, 2014 @ 2:17 am

  2. Why would you return two executed copies per borrower to Escrow? Those two copies (per borrower) should be kept by the borrower in the case that they opt to mail the rescission form, in which case they would still have a copy.

    Comment by Terry — January 14, 2015 @ 8:45 pm

  3. You must be there while the signer’s sign all THREE copies. If the package doesn’t have three copies, print enough for three copies for each signer, since SOMEtimes two names and dates are on the RTC, sometimes each signer has their own. The wording reads this (in some form:) “I/We acknowledge receipt of two copies of NOTICE OF RIGHT TO CANCEL.” That MEANS that they retain Two signed/dated copies and the other copy gets shipped back with the document package. They are agreeing that those two executed copies of RTC remain in their possession, and YES, when you read these documents the words mean something! Regarding keeping signatures off of “I Wish to Cancel”, a 3 1/2″ x 3 1/2″ yellow sticky note sits on top of that part of the paper and works really well to keep signers from signing in places they shouldn’t, like YOUR signature on any notarized documents. I follow directions, but I wish that these companies would READ the acknowledgement on the first page of the 1003: “If this is an application for joint credit, Borrower and Co-Borrower each agree that we intend to apply for joint credit (sign below).” For ONE borrower, I get instructions to sign and instructions NOT to sign page 1. When there is a single borrower and NO instructions, I have them sign one copy of page 1, and I send along a blank copy of page 1, and let them pitch the one that they don’t want. When they ask a single borrower to sign the first page of the 1003 it doesn’t make any sense. We are always learning and have to think ahead.

    Comment by betty — May 13, 2019 @ 2:10 am

  4. What if as a notary, you forgot to have them date it. Realized after sending docs

    Comment by Dorothy — March 9, 2021 @ 10:08 pm

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