Here is our situation

Borrower signs all documents (note, HUD-1, rescission, etc) with the exception of the Deed of Trust. They want to add their 9 yr old daughter to title which is why they stated they did not sign the Deed. We are past our rescission period but our company for some reason did not fund the loan. Closing Manager stated that because they settlement agent could not provide all signed docs the closing was "invalid". They now want to reclose the loan. My question is regarding the validity of the loan that they signed the docs for - is this a valid closing and since the borrowers didn't rescind are we obligated to fund this loan or can we start again.

Opinions much appreciated.

I wouldn't close without the deed of trust either! Borrowers backed out of the deal and get to start over. Without the deed of trust I don't think rescision period even started. In any event, I would re-document, re-notice rescision rights and wait before closing.
BTW - How do you plan to get contractual consent from the 9-year old?

Thanks - we're not allowing the 9 yr old on the Deed. I can't imagine why any borrower would think that would be allowed.