NMLS Uniform State Test (UST) Mortgage Practice Exam

When a borrower exercises their right to rescind a mortgage transaction, it triggers specific obligations for the lender and any third parties involved, such as escrow agents. The timeframe within which escrow must refund any money collected is 20 calendar days. This regulation is in place to ensure that borrowers have their funds returned promptly after the rescission, allowing for a smooth reintegration of funds back to the borrower following the cancellation of the transaction. Adhering to this timeline is crucial for maintaining compliance and fostering trust between borrowers, lenders, and escrow services.

In this case, 20 calendar days provides a clear guideline for all parties on the expected processing period for refunds, which is particularly important in safeguarding the borrower's rights and ensuring they are not unfairly delayed after choosing to rescind the agreement.