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Understanding TILA Violations: Your Right to Rescind and Recover Damages
Published June 23, 2026 · 5 min read
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Published June 23, 2026 · 5 min read
Fill out the form below and we'll contact you within 24 hours.
The Truth in Lending Act is one of the strongest consumer protections available. When lenders violate it, homeowners can cancel their loan, recover damages, and even stop a foreclosure in its tracks.
If the lender failed to properly disclose your right to cancel, the rescission window extends from 3 days to 3 full years.
Recover statutory damages of $400–$4,000 for violations plus actual damages and, in some cases, attorney's fees.
A valid rescission voids the lender's security interest — meaning they cannot foreclose on your home.
TILA can be raised as a recoupment defense any time — even if the affirmative claim is time-barred.
Most TILA violations are buried in the fine print of your closing documents. Our forensic loan audit process systematically finds them.
We examine the TILA disclosure, notice of right to cancel, note, and deed of trust for errors and omissions.
We recompute the finance charge, APR, and payment schedule to identify understatements beyond legal tolerances.
We verify proper notice and copies were provided, and whether your rescission window may still be open.
We quantify your statutory damages and build your defense or rescission case to put you in the strongest position.
The Truth in Lending Act (TILA) is one of the most powerful consumer protection laws available to homeowners. It requires lenders to disclose loan terms clearly — and when they don't, you may have the right to rescind (cancel) the entire loan or recover statutory damages of $400 to $4,000 per violation. At Dream Financial Management, we help identify TILA violations hidden in mortgage documents.
For most refinances and home equity loans, you have 3 business days to cancel. If the lender failed to provide proper notice of this right, the rescission period extends to 3 years. This is the nuclear option — rescinding the entire loan.
Lenders must accurately disclose the finance charge, APR, amount financed, total of payments, and payment schedule. Errors in these disclosures — even small ones — can trigger TILA liability.
Loan originators cannot receive compensation based on loan terms (yield spread premiums). Kickbacks and steering are prohibited. Violations can support a defense against foreclosure.
Failure to provide two copies of the Notice of Right to Cancel at closing
Understating the finance charge or APR by more than the tolerance ($100 or 0.125%)
Improperly completing the TILA disclosure form — wrong dates, missing signatures, blank boxes
Failing to disclose prepayment penalties or balloon payments
TILA violations can be raised as affirmative defenses in judicial foreclosure cases, or as grounds for a separate lawsuit in non-judicial states to halt a trustee sale. A valid rescission under TILA voids the security interest — meaning the lender cannot foreclose. The lender must return all payments and fees, and you must repay the principal (often negotiated down). See our complete TILA violations guide.
We'll review your closing documents for disclosure errors and evaluate your rescission rights.