Final answer:
When a consumer exercises their right of rescission, the lender must refund any finance charges and fees within 20 days. The right of rescission is a consumer protection right under the Truth in Lending Act, allowing borrowers to cancel certain loan agreements within a specific timeframe.
Step-by-step explanation:
When a consumer decides to exercise their right of rescission, the lender is typically required to refund any finance charges and other fees associated with the loan within 20 days following the receipt of the notice of rescission. This refunding process is a consumer protection provision outlined in the Truth in Lending Act (TILA) in the United States, which is designed to give borrowers the opportunity to reconsider their commitments to certain types of credit transactions.
The borrower must rescind within three days of closing, receiving the Truth in Lending disclosures, or receiving the notice of the right to rescind, whichever comes last. It is important that both lenders and borrowers understand their rights and obligations under this law, to ensure that the processes involved proceed smoothly and according to legal requirements.