TILA's right of rescission and statutory damages, explained

Our TRID timeline explainer covers when the Loan Estimate and Closing Disclosure are legally due. This page covers something different: what recourse the Truth in Lending Act actually gives a borrower — separate from a CFPB enforcement action — when a required disclosure is missing or wrong on a covered loan.

The right of rescission: a real cancellation right, not just a complaint

Under 15 U.S.C. § 1635 (implemented at Regulation Z, 12 CFR § 1026.23), a consumer has the right to rescind certain credit transactions secured by their principal dwelling within 3 business days of consummation, receiving the required disclosures, or receiving the notice of the right to rescind itself — whichever happens last. Exercising it requires only written notice to the creditor, not a lawsuit; the US Supreme Court unanimously confirmed in a 2015 decision that sending timely written notice is enough to rescind, without needing to also file suit within the same window.

What this right does — and doesn't — cover

Rescission only applies to a transaction secured by the consumer's principal dwelling, and specifically excludes a "residential mortgage transaction" — the loan used to actually buy or build that dwelling in the first place. In practice, that means a purchase-money first mortgage generally isn't rescindable at all; the right mainly reaches a refinance, a home equity loan, or a HELOC on a home the consumer already owns, where new debt is added against a home that's already theirs.

The extended, 3-year rescission window for a real disclosure failure

The standard rescission window is only 3 business days — but under § 1635(f), if the creditor never delivered the required material disclosures or the notice of the right to rescind at all, that window extends to 3 years after consummation, or until the property is sold, whichever comes first. This extended window exists specifically for a real, substantive failure to disclose — not for every technical timing slip covered by TRID, which is a distinct compliance question from whether the required disclosures and rescission notice were ever actually delivered.

Statutory damages: specific dollar figures, not just "actual harm"

Separately, 15 U.S.C. § 1640 lets a consumer recover actual damages plus statutory damages for certain TILA violations, without having to prove a specific dollar loss. For an individual claim on a closed-end loan secured by real property, statutory damages are twice the finance charge involved, with a floor of $400 and a ceiling of $4,000 — plus costs and reasonable attorney's fees if the consumer wins. This is a distinct remedy from rescission itself: a consumer can potentially pursue statutory damages for a disclosure violation even in a situation, like a purchase-money mortgage, where rescission isn't available at all.

What this page is, and isn't: an explanation of a real federal consumer remedy and specific statutory dollar figures, for general understanding — not legal advice on whether a specific transaction actually qualifies for either remedy, which depends on facts a lawyer should review. Pursuing either remedy is a private legal matter, separate from a CFPB complaint or an entry in our own Register.

What to actually check

If you refinanced or took out a home equity loan or HELOC and never received a Closing Disclosure, a notice of your right to rescind, or a copy of the disclosures at all, note the date you first realized that and talk to a consumer-protection attorney promptly — the extended rescission window runs from consummation, not from when you noticed the problem, so time already matters. A purchase-money mortgage on a home you're buying for the first time generally isn't rescindable under this right regardless of what went wrong with its disclosures.