Hindsight is indeed a wonderful gift. Practically everyone sees much more clearly looking into the past than they do when peering into the future. But it's a luxury few of us enjoy.

Fortunately, when it comes to our homes, the law gives home owners 20-20 rear view vision. But only for a short period of time.

Under the Truth in Lending Act, consumers have a right to rescind a loan secured by their homes. But you have only until midnight of the third business day following consummation of the loan to do so.

Similarly, under the Federal Trade Commission's "Cooling Off Rule," you have three business days to cancel most home improvement contracts when they are signed in your home.

According to TILA, you can change your mind about any loan that puts your home at risk for any reason whatsoever. All you have to do is inform the lender within a three-day business day rescission period. If you do that, the creditor must return all you're the charges you paid to open the account, including any application and appraisal fees.

Last week, the Federal Reserve Board issued a clarification to its rules so that there would no misunderstanding about what constitutes a business day. For purposes of rescission, all calender days except Sundays and four federal holidays New Year's Day, Jan. 1; Independence Day, July 4; Veterans Day, Nov. 11, and Christmas Day, Dec. 25 are considered business days.

There had been some question about what whether the proceeding Friday or following Monday should be considered a non-business day when the holiday falls on a weekend. But the Fed said no, even if government offices are closed.

Since the rescission notice that lenders are required to provide must indicate the date the rescission expires, the Fed said, consumers are not likely to be confused by Monday or Friday holidays.

Incidently, creditors have the option to extend the rescission period beyond three business days.

Three also is the magic number when it comes to the FTC's cooling off rule regarding home improvement contracts. But there are some key exceptions.

The 72-hour cancellation period doesn't apply when they deal starts out as a retail transaction at the contractor's place of business and is completed in your home. And emergency repairs that must be made immediately aren't covered, either.

But the law does apply to sales over $25 made by door-to-door salesmen, deals agreed to over the phone in your home, and pacts made outside the contractor's normal place of business such as a home show. Again, no reason is necessary, and once you cancel, the contractor has 10 days to return your deposit.

In some states, consumer protection laws are even more home owner friendly. In Maine, for example, work cannot even start until after the three-day rescission period expires. If it does and you properly canceled the contract, you owe nothing even if the work is completed.

Contractors are not only required to alert their customers to the FTC's rule, they must provide you with two copies of a cancellation form. If they don't, a simple letter will suffice.But be sure you send it by certified mail or overnight delivery.

Published: April 24, 2002

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