Violations of the Act may give the borrower the right to: (1) rescind the loan; (2) recover or offset amounts already paid, including interest, finance charges and closing costs; and (3) collect statutory damages of $1,000 plus attorneys fees.
The Act and regulations require lenders to disclose to borrowers the true costs of credit so they can comparison shop for the best loan. Required disclosures include the annual percentage rate, finance charges, total payments, the amount financed and the payment schedule.If the lender does not make these disclosures, the borrower's right to rescind is extended for three years.
Three Day Cooling Off
The Act also provides home mortgage borrowers with a three day "cooling off" period to decide whether or not they want to rescind the loan, where there is a refinancing, second mortgage, home equity loan, and home improvement credit sale.
Violations of the Right to Rescind Disclosure
A lender violates the requirement of disclosing the right to rescind if: (a) it does not give each borrower two copies of the document that explains the right to rescind; (b) it uses the wrong Federal Reserve form disclosing the right to rescind, i.e. using the new loan form instead of the refinancing form; and (c) if there is a $35 or more understatement in the finance charge.