We subscribe to Scheshunoff's 'Bank Regulatory Compliance Alert' where they say that failure to give the High Rate, High fee disclosure results in the rescission period being open for 3 years or until the disclosure is given . I had never heard this....giving the disclosure after the loan has closed can remedy the error?? As a second option, what if we refunded enough fees to get the borrower under the 'high fee' amount?

You can not cure this problem by giving the HOEPA disclosure after the fact. The HOEPA disclosure is a material disclosure therefore failing to give it makes your material disclosures inaccurate.

By refunding to bring the loan below HOEPA disclosures would now make your material disclosures overstated. (Look at 226.23(g))