Mortgage loan closed 3/15 and is now in rescission period waiting to disburse funds on 3/19. Customer wants to change terms now. Since that one is closed (but not yet on the system since funds aren't disbursed) would we have to refinance it? Would it be best if the customer just exercised their right to rescind and we start all over? Can we use the existing loan and just make the appropriate changes? Original loan was 20 yrs with payment amortized over 30 yrs causing a balloon payment at the end of the 20 yrs. Customer now is concerned about the balloon payment and wants to just to a 20 yr loan. What is our best option??

I think they should rescind and start over. IMO it would be cleaner to do it that way, although, they will have to go through rescission again.

Since the only changes would be the interest rate and payment amount can we just change the early TIL, wait 3 days and close (with new closing docs) and wait 3 rescission days? If we could do this would there even be another rescission period?

If they rescind, you're technically doing a whole new loan. First you mark this loan as 'approved but not accepted.' Then you create a new file # and proceed with the 20 yr fixed loan. You can move stuff (appraisal, cbr) over from the old file but you'll have to reunderwrite to make sure they qualify for the new product. You'll do the new GFE and TIL and proceed with the waiting periods you outlined above. And yes, definitely you would have another rescission period.

Why not leave the loan as is? But additionally provide the borrower with a 20-year amo schedule. If they adhere to the 20-yr payment schedule, their concern about the ballon payment is moot; and, if they don't, they provide themselves some leeway for smaller payments during unknown economic times.

No recission. No redisclosure. No problem.

Just a thought.