Illinois exam glossary
Truth in Lending Act (TILA)
A buyer can receive a Closing Disclosure three business days before a purchase mortgage closes without gaining three days to cancel that mortgage afterward. TILA contains several different clocks. Start with the transaction and the right being tested, then count the days.
Last reviewed:
The short answer
The Truth in Lending Act, or TILA, is a federal consumer-credit law implemented by Regulation Z. It requires meaningful disclosure of credit costs and terms and includes substantive protections. For the Illinois real estate exam, distinguish the note rate, finance charge and APR; recognize credit-advertising triggers; and separate mortgage-disclosure timing from rescission. The usual loan secured by the home being purchased is exempt from TILA rescission, while qualifying nonpurchase credit secured by a current principal dwelling can be rescindable.
Reviewed October 26, 2026. PSI lists TILA, including advertising, at National IV.C.2 and TRID at IV.C.3. The whole Financing domain has 10 of the 100 scored national broker questions, not 10 questions on TILA alone. This page explains core exam distinctions using the identified current federal provisions. Examples assume covered consumer credit unless stated otherwise; original questions are not PSI questions or a compliance review of a live loan.
Identify the transaction before choosing the rule
- Check purpose and creditor status. General coverage concerns credit offered or extended regularly to consumers, primarily for personal, family or household use, with a finance charge or a written agreement for more than four installments. The creditor definition and exemptions still matter. A home lien does not turn a primarily business-purpose loan into consumer credit.
- Choose the credit structure. A typical purchase mortgage or home-equity installment loan is closed-end credit. A qualifying reusable HELOC is open-end credit. Open-end rescission uses section 1026.15; closed-end rescission uses section 1026.23. Do not transfer every mortgage-form or advertising rule from one structure to the other.
- Name the number. The note rate determines contract interest. The finance charge is the covered dollar cost of credit. APR expresses covered cost and payment timing as a yearly rate. Amount financed is calculated under the disclosure formula and can differ from the note amount. None of these is simply the buyer’s remaining cash to close.
- Use the right disclosure clock. For a standard TRID-covered mortgage, the Loan Estimate generally must be delivered or mailed within three creditor-business days after application and at least seven specific-business days before consummation. The Closing Disclosure generally must be received at least three specific-business days before consummation. Those are separate requirements, with limited exceptions.
- Test rescission from the collateral and transaction. A loan secured by the new principal dwelling to finance its acquisition or initial construction is exempt. A qualifying personal-purpose loan secured by the current principal dwelling may be rescindable. A same-creditor refinance has a qualified exemption; a new advance can change the answer. A loan against the current home to buy a new one can also be rescindable.
- For ordinary closed-end rescission, start after the latest of consummation, receipt of the required notice and delivery of all material disclosures. Count every calendar day except Sunday and federal legal public holidays. The usual deadline is midnight on the third counted day. Missing required material information can extend the right, but not every disclosure error creates an automatic three-year cancellation right.
- Read the advertisement itself. For covered closed-end credit, a stated payment count or repayment period, payment amount or finance-charge amount can trigger additional disclosures. A stated required down-payment amount or percentage is also a trigger for a credit sale, where the payment reduces the cash price paid to the seller. State the required down payment, full repayment terms and APR as applicable, including that APR may increase. Separate rate-advertising and dwelling-secured advertising rules can apply too.
| Item | What it tells you | Common mistake |
|---|---|---|
| Note interest rate | Rate used to accrue contract interest | Calling it APR |
| Finance charge | Dollar cost included under Regulation Z | Including every closing cost |
| APR | Covered cost as a yearly rate, reflecting timing | Dividing a lifetime charge by the original principal |
| Amount financed | Net credit under the required formula | Always equating it with the face amount of the note |
| Total of Payments on the Closing Disclosure | Scheduled principal, interest, mortgage insurance and loan costs under the form’s rules | Treating it as today’s cash to close |
| Loan Estimate | Early estimated loan terms and costs | Treating it as final approval |
| Closing Disclosure | Transaction terms and costs before consummation | Treating its waiting period as a purchase cancellation right |
| Rescission notice | Right to cancel a qualifying credit transaction | Giving that right to every homebuyer |
The distinctions that matter
| Distinction | How it works | What to notice |
|---|---|---|
| TILA and Regulation Z | TILA is the federal act. Regulation Z, 12 CFR Part 1026, implements it. Its official interpretations explain application. | Law versus implementing regulation. |
| Disclosure and permission | Receiving forms does not approve the loan, make an unlawful charge lawful or guarantee an affordable payment. TILA includes substantive rules as well as disclosure rules. | A form is not a blanket compliance cure. |
| Note rate and APR | The note rate measures contract interest. APR also reflects applicable credit costs and timing. More prepaid finance charges generally raise APR when the other loan assumptions match. | Equal note rates can produce different APRs. |
| Finance charge and all closing costs | A fee’s name or required status alone does not settle the classification. Apply the inclusions and exclusions in section 1026.4. Certain bona fide, reasonable real-estate fees are excluded. | Check the specific exception. |
| Amount financed and remaining closing funds | Amount financed is a credit-disclosure calculation. Remaining funds depend on deposits, transaction charges, credits and funding. | A lower amount financed is not necessarily the cash due at closing. |
| General and specific business days | The initial three-day Loan Estimate delivery rule generally uses days when the creditor is open for substantially all business functions. Rescission and the standard three-day Closing Disclosure waiting period use all days except Sundays and federal legal public holidays. | Saturday can count even when the lender is closed. |
| Consummation and a sale contract | Consummation occurs when the consumer becomes contractually obligated on the credit transaction under applicable law. Signing a sale agreement alone is not necessarily loan consummation. | Identify the credit obligation, not just a signing date. |
| Purchase and a loan against the current home | Acquisition credit secured by the home being acquired can be exempt from rescission. Credit secured by the current principal dwelling to help buy a different home can be rescindable. | The use of proceeds alone does not answer the question. |
| Required down payment and no down payment | For a covered credit sale, stating a required down payment triggers section 1026.24(d). A truthful statement that no down payment is required does not trigger that paragraph by itself. Other advertised terms or rules can still apply. | No trigger under one paragraph does not mean no advertising duties. |
| Open-end and closed-end rescission | HELOC rules can apply when a plan opens or its secured credit limit increases. An ordinary advance within an established limit does not receive a new rescission right merely because the consumer draws again. | Use section 1026.15 for the open-end plan. |
| A corrected fee and a restarted waiting period | A pre-consummation correction can be required without a new three-day wait. The listed restart events concern an APR that becomes inaccurate under the rule, a relevant loan-product change or addition of a prepayment penalty. | A changed number is not automatically a restart event. |
Work through the facts
The purchase-loan distinction
A consumer borrows to acquire a new principal dwelling. Only that dwelling secures the standard purchase mortgage. Assume no separate cancellation right.
- The loan is a residential mortgage transaction under Regulation Z.
- Section 1026.23(f)(1) excludes it from closed-end rescission.
Answer: The buyer does not get a TILA right to cancel this purchase mortgage for three days after consummation. Required pre-consummation disclosures still matter.
A new-creditor refinance
A regular creditor makes a personal-purpose, closed-end refinance secured by the consumer’s current principal dwelling. The creditor differs from the original creditor, and no other exemption applies.
- The current principal dwelling secures covered nonpurchase credit.
- The same-creditor exemption does not apply on these facts.
Answer: The transaction is subject to the ordinary rescission rules, assuming the required notice and material disclosures are properly provided.
Borrowing against the current home
A consumer obtains a covered personal-purpose bridge loan to help acquire a different home. The consumer’s current principal dwelling secures the bridge loan. No other rescission exemption applies.
- The loan is not secured only by the new dwelling being acquired.
- The official interpretation specifically addresses credit against the current principal dwelling used to acquire or construct the new one.
Answer: The current-home security can make the bridge loan rescindable. Calling its purpose a home purchase does not establish the acquisition-loan exemption for this collateral.
Identify a same-creditor new advance
In an otherwise qualifying same-creditor refinance, the stated new amount financed is $213,500. The unpaid principal is $200,000, earned unpaid finance charge is $500, and $3,000 is attributable solely to refinancing costs under the rule. Assume these figures already use the correct classifications, contain no duplication and no other exemption applies.
- The specified existing-debt and cost amounts total $203,500.
- $213,500 − $203,500 = $10,000 beyond those amounts.
Answer: The $10,000 new advance is the rescindable extent under section 1026.23(f)(2). Do not say every same-creditor refinance is completely exempt or that this calculation identifies a new right over all existing debt.
Use the latest delivery
A rescindable transaction is consummated Friday, October 23, 2026. Material disclosures arrive that day, but the required rescission notice arrives Monday, October 26. Assume no relevant federal holiday or other exception.
- Monday is the latest triggering event.
- The next counted days are Tuesday, October 27; Wednesday, October 28; and Thursday, October 29.
Answer: The ordinary deadline is midnight Thursday, October 29, not Tuesday based solely on Friday’s consummation.
A holiday changes the count
All three rescission events occur Tuesday, November 10, 2026. Veterans Day is Wednesday, November 11. There is no other exception.
- Exclude November 11 because it is a federal legal public holiday.
- Thursday, November 12 is day one; Friday is day two; Saturday is day three.
Answer: The ordinary deadline is midnight Saturday, November 14. Saturday counts under this rule.
A co-owner need not be a note signer
Two consumers own and use their principal dwelling. Both ownership interests secure a covered rescindable loan, but only one signs the note.
- Each encumbered owner can be a consumer for rescission.
- If both have the right, either one can exercise it effectively for all consumers.
Answer: Both are entitled to the required notice and material disclosures. Mere occupancy without the relevant ownership interest is different.
Amount financed is not always the note amount
A teaching problem supplies a $250,000 principal loan amount, $5,000 in prepaid finance charges and no other adjustments. Those charges have not already been removed from the supplied base.
- Subtract the prepaid finance charges once.
- $250,000 − $5,000 = $245,000.
Answer: The amount financed is $245,000 on the stated facts. This does not calculate APR or the buyer’s remaining closing funds.
An excluded fee stays out of a limited fee comparison
A covered real-property loan has $3,000 in borrower-paid points, $1,000 in a qualifying prepaid origination finance charge and a $600 bona fide, reasonable pre-closing appraisal fee. Apply the stated section 1026.4(c)(7) exclusion; ignore all other charges.
- The two listed finance-charge items total $4,000.
- The qualifying appraisal fee is excluded from this comparison, even though the service is required.
Answer: The included listed fees are $4,000. That is not the loan’s complete lifetime finance charge because interest and other charges were expressly left out.
A broker’s financing ad
A real estate broker publishes an ad for actually available closed-end consumer mortgage credit stating “30-year mortgage” and omitting all associated required credit terms.
- A stated repayment period is a trigger under section 1026.24(d).
- The advertising provisions are not confined to persons who themselves meet the creditor definition.
Answer: The broker cannot rely on being a real estate broker to avoid the applicable advertising requirements. The incomplete example needs the required additional disclosures.
“No down payment” is different
A truthful advertisement says only “No down payment required.” It states no payment amount, finance-charge amount, repayment period or other triggering term.
- The official interpretation says this phrase does not trigger section 1026.24(d)’s additional disclosures by itself.
- The advertisement must still satisfy the other applicable rules; it cannot promote unavailable terms.
Answer: Do not treat zero required down payment as the same trigger as “5% down.” This limited result does not approve an actual advertisement.
The Closing Disclosure arrives before the loan
A consumer receives a standard covered Closing Disclosure in person on Monday, October 26, 2026. No holiday, correction, waiver or special exception affects the waiting period, and all other timing rules are satisfied.
- Tuesday, Wednesday and Thursday are the next three specific-business days.
- The three-day requirement concerns receipt before consummation, not a right to rescind afterward.
Answer: Thursday, October 29 is the earliest consummation under this stated waiting-period calculation.
Mistakes to avoid
- Giving every buyer three days to cancel. The standard acquisition mortgage secured only by the home being acquired is exempt from TILA rescission.
- Assuming every refinance has the same result. Check creditor identity, new advances, collateral and other exemptions.
- Calling all closing fees finance charges. Apply the actual inclusions and exclusions, including bona fide and reasonable real-estate fees.
- Subtracting an upfront charge twice. Read whether the supplied amount already excludes it.
- Calling a total dollar charge APR. APR is a yearly rate that depends on amounts and payment timing.
- Using Monday through Friday for every deadline. The regulation has different business-day definitions.
- Treating a generic signed form as a valid waiver. Rescission waiver requires a bona fide personal financial emergency and the rule’s dated, written, signed statement; printed forms are prohibited.
- Assuming a missing form always means three full years. Identify the required notice or material disclosure, the outside limit and earlier terminating events.
- Calling rescission a free loan. Rescission has restoration and tender procedures. It does not simply let the consumer keep the creditor’s money.
- Assuming a website ad can hide all terms anywhere. Clear and conspicuous disclosure still applies, with additional format rules where applicable.
- Treating “APR only” as a down-payment trigger. A stated APR alone is not a section 1026.24(d) trigger, although rate-advertising requirements still apply.
- Treating a TILA review as loan approval. Actual eligibility, affordability, forms and legal rights depend on the loan and current applicable rules.
Check your understanding
These are original teaching questions, not recalled or predicted PSI questions. Answer first, then explain why the other choices fail.
1. Which regulation implements the Truth in Lending Act?
- Regulation V
- Regulation X
- Regulation Z
- Regulation B
Show answer and explanation
Answer: C. Regulation Z
TILA is the act; Regulation Z is the implementing regulation in 12 CFR Part 1026.
2. A loan is expressly primarily for expanding a business, although a home secures it. Which conclusion follows under the general purpose exemption?
- All business loans require a Closing Disclosure
- The home lien makes the loan consumer credit automatically
- The loan automatically has purchase-mortgage rescission
- The business-purpose exemption can apply
Show answer and explanation
Answer: D. The business-purpose exemption can apply
Section 1026.3(a) exempts primarily business-purpose credit. Collateral does not by itself change the stated purpose; other laws can still apply.
3. Which statement best describes the finance charge?
- The dollar cost of credit included under Regulation Z
- The annual interest rate only
- Every dollar paid at closing
- The property’s sale price
Show answer and explanation
Answer: A. The dollar cost of credit included under Regulation Z
The definition includes applicable credit costs but has specific exclusions. It is a dollar amount, unlike APR.
4. Two loans have identical amounts, schedules and note rates. One has higher covered prepaid finance charges. What generally follows?
- Both APRs must be identical
- Its note rate must rise by the fee percentage
- Its property value must be lower
- Its APR is higher
Show answer and explanation
Answer: D. Its APR is higher
With the other assumptions held equal, higher covered upfront cost generally increases APR. APR is not just the note rate.
5. A problem gives $250,000 principal and $5,000 in prepaid finance charges not already deducted, with no other adjustments. What is amount financed?
- $255,000
- $5,000
- $250,000
- $245,000
Show answer and explanation
Answer: D. $245,000
Subtract the stated prepaid finance charges once: $250,000 − $5,000 = $245,000. Remaining closing funds are a different calculation.
6. A required pre-closing appraisal fee meets the bona fide and reasonable real-property fee exclusion. Is it necessarily a finance charge because it is required?
- No, the stated exclusion applies
- Yes, but only if the borrower chooses the appraiser
- No fee can ever be a finance charge
- Yes, required means included without exception
Show answer and explanation
Answer: A. No, the stated exclusion applies
Section 1026.4(c)(7) excludes the specified qualifying fee. Required status does not erase the exception.
7. Which standard transaction is exempt from section 1026.23 rescission on the stated facts?
- Acquisition mortgage secured only by the new principal dwelling being purchased
- Covered personal-purpose refinance with a different creditor and no other exemption
- Covered loan against the current principal dwelling for unrelated personal expenses
- Personal-purpose home-equity installment loan secured by the current principal dwelling
Show answer and explanation
Answer: A. Acquisition mortgage secured only by the new principal dwelling being purchased
The acquisition mortgage is a residential mortgage transaction. Its exemption does not erase applicable disclosure duties.
8. For ordinary closed-end rescission, which event controls when the three-day count starts?
- The property showing
- The application alone
- The latest of consummation, required notice and all material disclosures
- The sale agreement alone
Show answer and explanation
Answer: C. The latest of consummation, required notice and all material disclosures
Use the latest required event and the applicable business-day definition. Loan signing alone may not be the last event.
9. All rescission events occur Friday, October 23, 2026. There is no relevant holiday or other exception. When is the ordinary deadline?
- At the end of the bank’s Friday hours
- Midnight Wednesday, October 28
- Midnight Tuesday, October 27
- Midnight Monday, October 26
Show answer and explanation
Answer: C. Midnight Tuesday, October 27
Saturday is day one; Sunday is excluded; Monday is day two; Tuesday is day three. The deadline is midnight, not the bank’s closing time.
10. Consummation and material disclosures occur October 23, but the required notice arrives October 26, 2026. No holiday affects the count. When does the ordinary right expire?
- October 29 at midnight
- October 27 at midnight
- October 28 at midnight
- October 26 at noon
Show answer and explanation
Answer: A. October 29 at midnight
The latest event is Monday, October 26. Tuesday through Thursday are the three counted days.
11. Two encumbered owners have rescission rights, but only one signed the note. Which statement is correct?
- Either entitled consumer can rescind effectively for all
- Every adult occupant must join the notice
- Neither can rescind without a broker’s consent
- Only the note signer can ever rescind
Show answer and explanation
Answer: A. Either entitled consumer can rescind effectively for all
Ownership interest subject to the lien matters. Section 1026.23(a)(4) makes one entitled consumer’s exercise effective for all consumers.
12. In an advertisement for a covered closed-end credit sale, which phrase on its own states a section 1026.24(d) trigger term?
- Apply today
- Competitive financing available
- Only 5% down required
- No down payment required
Show answer and explanation
Answer: C. Only 5% down required
The stated required down-payment percentage triggers additional terms in this credit-sale scenario. The official interpretation limits this down-payment trigger to credit sales; the other options do not state that trigger by themselves.
13. A truthful ad states only “No down payment required,” with none of the other section 1026.24(d) triggers. What is the limited result?
- It must be treated as “5% down”
- It exempts every future advertisement from Regulation Z
- That phrase alone does not trigger paragraph (d), but other rules remain
- It automatically violates TILA
Show answer and explanation
Answer: C. That phrase alone does not trigger paragraph (d), but other rules remain
The official interpretation distinguishes no down payment from a specified required down payment. This does not approve unavailable or misleading terms.
14. Can a real estate broker advertising covered consumer credit ignore Regulation Z advertising provisions simply because the broker is not the lender?
- No, applicable advertising provisions extend beyond creditors
- Only if the seller pays the commission
- Yes, on social media only
- Yes, all nonlenders are exempt
Show answer and explanation
Answer: A. No, applicable advertising provisions extend beyond creditors
The official interpretation to section 1026.2(a)(2) says all persons must comply with applicable advertising provisions, not just creditors.
15. A consumer receives a standard Closing Disclosure in person Monday, October 26, 2026. All other timing rules are satisfied; no holiday or exception applies. Earliest consummation under this three-day rule?
- Monday, November 2
- Tuesday, October 27
- Friday, October 30
- Thursday, October 29
Show answer and explanation
Answer: D. Thursday, October 29
The next three specific-business days are Tuesday, Wednesday and Thursday. This is a pre-consummation waiting period, not post-purchase rescission.
16. The Loan Estimate application rule has been triggered Monday at a creditor open for substantially all business functions Monday through Friday. No holiday or denial/withdrawal exception applies. Latest delivery or mailing under its initial three-day rule?
- Wednesday
- Saturday
- Tuesday
- Thursday
Show answer and explanation
Answer: D. Thursday
Tuesday, Wednesday and Thursday are the three creditor-business days after application. This calculation does not replace the separate seven-day waiting requirement.
17. A Closing Disclosure must be corrected only because a recording fee changed. The APR stays accurate, the loan product is unchanged and no prepayment penalty is added. Which rule applies?
- No corrected disclosure is ever required
- A new rescission right automatically arises
- Provide the corrected disclosure at or before consummation; this change alone does not restart the wait
- Every corrected fee starts a new three-day wait
Show answer and explanation
Answer: C. Provide the corrected disclosure at or before consummation; this change alone does not restart the wait
The three specified restart events are an inaccurate APR under the rule, a loan-product change causing the required information to become inaccurate, or an added prepayment penalty. Other corrections still have timing requirements.
18. An established qualifying HELOC permits a routine advance within its existing credit limit, with no new security interest or other rescission event. Does that draw alone create a fresh rescission right?
- Only if taken on Saturday
- No
- Yes, every draw creates three new days
- Only if the home’s value rises
Show answer and explanation
Answer: B. No
Section 1026.15(a)(1)(ii) excludes each extension made in accordance with a previously established credit limit from a fresh draw-by-draw right.
19. Covered personal-purpose bridge credit is secured by the consumer’s current principal dwelling to help acquire another home. No other rescission exemption applies. Which answer is best?
- Only the real estate broker can cancel the loan
- Rescission can apply because the current principal dwelling secures the loan
- No rescission because any purchase-related use is exempt
- Rescission applies only after selling the current home
Show answer and explanation
Answer: B. Rescission can apply because the current principal dwelling secures the loan
The interpretation to section 1026.23(a)(1) addresses this current-home bridge-credit situation. Distinguish it from acquisition credit secured only by the new principal dwelling.
20. An otherwise qualifying same-creditor refinance has $213,500 new amount financed, $200,000 unpaid principal, $500 earned unpaid finance charge and $3,000 solely attributable to refinancing costs. Figures are correctly classified and not duplicated; no other exemption applies. What is the new advance beyond the protected base?
- $3,000
- $213,500
- $13,500
- $10,000
Show answer and explanation
Answer: D. $10,000
The protected base on the stated figures is $200,000 + $500 + $3,000 = $203,500. Subtracting it from $213,500 gives $10,000, the extent subject to rescission under the same-creditor rule. This is not a complete live-file determination.
Common questions
What does TILA stand for?
Truth in Lending Act. It is a federal consumer-credit law implemented by Regulation Z, 12 CFR Part 1026. Its purpose includes meaningful disclosure of terms and costs, and it also imposes substantive protections.
What should I know about TILA for the Illinois exam?
Know coverage, the difference between note rate and APR, finance-charge inclusions and exclusions, mortgage-disclosure timing, advertising triggers and rescission. PSI expressly lists TILA, including advertising, at National IV.C.2 and TRID at IV.C.3. The 10-question Financing allocation belongs to the whole national broker domain.
Does TILA apply only to real estate loans?
No. It covers multiple types of consumer credit. General coverage and exemptions depend on purpose, creditor status and the credit arrangement. Real-property security does not make a primarily business-purpose loan consumer credit by itself. Nor does a loan secured by real property become exempt merely because it exceeds the annual dollar threshold for certain other credit.
Is APR the same as the interest rate?
No. The note rate determines contract interest on principal. APR relates the amount and timing of credit received to the amount and timing of payments, incorporating applicable finance charges. Compare similar loan assumptions; do not treat APR as a complete prediction of every borrower’s actual future cost.
Are all required closing fees finance charges?
No. Section 1026.4 contains specific inclusions and exclusions. For real-property or residential mortgage transactions, specified bona fide, reasonable title, survey, document, notary, credit-report and qualifying pre-closing appraisal or inspection fees can be excluded. Buyer-paid points and applicable origination charges are different. Do not classify a fee from its name or required status alone.
How do amount financed, Total of Payments and cash to close differ?
Amount financed is the net credit calculated under the required formula. The Closing Disclosure’s Total of Payments covers scheduled principal, interest, mortgage insurance and loan costs under that form’s rules, including relevant payment and credit treatment. Cash to close concerns funds needed to finish the current transaction after its deposits, costs and credits. They are not interchangeable amounts.
When are the Loan Estimate and Closing Disclosure due?
For the standard covered mortgage, the Loan Estimate generally must be delivered or mailed within three creditor-business days after application and at least seven specific-business days before consummation. The consumer generally must receive the Closing Disclosure at least three specific-business days before consummation. There are limited exceptions, including special timeshare treatment and qualified emergency waivers. Mailing or emailing is not automatically same-day receipt.
For this application rule, the six pieces are the consumer’s name, income, Social Security number to obtain a credit report, property address, estimated property value and mortgage amount sought. The initial Loan Estimate clock is not postponed merely because the lender wants more application information.
Does every mortgage use the TRID forms?
No. The standard rule covers closed-end consumer credit secured by real property or a cooperative unit, with specified exceptions. HELOCs and reverse mortgages use other applicable disclosure regimes. A dwelling classified as personal property, other than the covered cooperative case, does not enter the standard TRID form set merely because someone lives in it. Form coverage and rescission coverage are separate questions.
Do homebuyers have three days to cancel a purchase mortgage?
The standard mortgage secured by the new principal dwelling to finance its acquisition or initial construction is exempt from TILA rescission. The Closing Disclosure waiting period is a separate pre-consummation protection. Sale-contract contingencies and any other cancellation right require their own analysis.
Are all refinances rescindable?
No. A qualifying personal-purpose refinance with a different creditor secured by the current principal dwelling is generally rescindable if no other exemption applies. A refinance by the same creditor has a qualified exemption, but a new advance beyond the rule’s protected existing debt and refinancing-cost amounts can be rescindable to that extent. Do not decide from the word refinance alone.
Can a loan used to buy another home still be rescindable?
Yes. The collateral matters. The official closed-end rescission interpretation specifically addresses a covered loan against the consumer’s current principal dwelling to acquire or construct a new one. A bridge loan secured by the current home can be rescindable even though the proceeds help with the purchase. Distinguish that from the standard acquisition mortgage secured only by the new principal dwelling.
Can a co-owner who did not sign the note rescind?
Yes, if that consumer’s ownership interest in the principal dwelling is subject to the security interest in the covered transaction. Each entitled consumer receives the required notice and material disclosures. Where more than one consumer has the right, one entitled consumer’s exercise is effective for all. Occupying the property without the relevant ownership interest does not by itself create this right.
Do Saturdays count for TILA rescission?
Ordinarily, yes. The specific definition counts calendar days other than Sundays and the federal legal public holidays specified in 5 USC 6103(a). It differs from the creditor-business-day definition used for the initial Loan Estimate deadline. Confirm the actual statutory holiday and applicable rule rather than assuming that every day a bank closes is excluded.
Does a disclosure mistake always give three years to rescind?
No. Missing the required rescission notice or material disclosures can prevent the ordinary period from running. The rule has a three-year outside limit, earlier terminating events such as sale or transfer of all the consumer’s interest, and a limited administrative-proceeding provision. Other disclosure errors do not automatically produce the same result. The exact loan facts and applicable legal rules matter.
Can a consumer waive rescission or keep the loan proceeds after rescinding?
A rescission waiver requires a bona fide personal financial emergency and the prescribed dated written statement describing the emergency and signed by all entitled consumers; printed waiver forms are prohibited. Convenience alone does not meet that rule. Rescission also involves refund, lien-termination and consumer tender obligations, with possible court modification. It is not a free-money right.
What are closed-end advertising trigger terms?
For covered closed-end credit, a stated number of payments or repayment period, payment amount, or finance-charge amount can trigger section 1026.24(d). A stated required down-payment amount or percentage is also a trigger for a credit sale; that term concerns money or trade-in value paid to the seller to reduce the cash price. The ad then needs the required down-payment information, full repayment terms and APR as applicable, including whether APR may increase. A balloon cannot disappear from the repayment picture. A stated APR alone is not a paragraph (d) trigger, but the rate-advertising rules still apply.
Is every correction to a Closing Disclosure a new three-day wait?
No. A new waiting period is required for the specified inaccurate APR, loan-product change or added prepayment penalty. Other pre-consummation changes generally require corrected disclosures received at or before consummation. An APR change within applicable accuracy rules is not automatically an inaccurate APR. Do not generalize a rounding tolerance without the actual loan facts.
Does TILA impose one national mortgage rate cap or guarantee approval?
No single nationwide mortgage interest rate follows from the general disclosure rules. Regulation Z contains particular restrictions and protections, and other laws may apply. For transactions covered by its ability-to-repay rule, the creditor must make the required reasonable, good-faith repayment determination. A disclosed APR, a qualified-mortgage label or a practice score is not a personal loan-approval guarantee.
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Official sources and scope
Reviewed October 26, 2026. The cited current Regulation Z provisions and interpretations support the coverage, fee, disclosure, advertising and rescission distinctions above. Section 1026.38 supplies the Closing Disclosure definitions; section 1026.18(b) supplies its amount-financed calculation by cross-reference. The consumer APR explanation is an identified prior actual reading. Review does not determine a live loan’s compliance, actual deadline or cancellation rights.
- PSI Illinois Candidate Information Booklet: National Financing outline
- Regulation Z 1026.1: authority, purpose and general coverage
- Regulation Z 1026.2: definitions and business days
- Regulation Z 1026.3: purpose and dollar-threshold exemptions
- Regulation Z 1026.4: finance-charge definition and real-estate fee exclusions
- Regulation Z 1026.18(b): amount financed and prepaid-charge treatment
- Regulation Z 1026.19(e) and (f): covered mortgage disclosure timing
- Regulation Z 1026.22(a)(1): APR as a yearly cost measure
- Regulation Z 1026.23: closed-end rescission
- Regulation Z 1026.24: closed-end advertising
- Regulation Z 1026.15(a)(1): open-end rescission events
- Regulation Z 1026.38(o): Closing Disclosure loan calculations
- Regulation Z 1026.43: scope and the ability-to-repay principle
- CFPB: mortgage interest rate compared with APR
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