I have a question regarding a loan that was subject to a Right of Rescission and the notice was not given to the borrowers at the closing table. The loan closed 8 months ago. Does this mean that the loan is now under a 3 year right of rescission? Or if we give them the ROR notice and have it signed now, than is it subject to the standard 3 days and we cross our fingers they don't rescind?

Thanks.

You cannot give it now.
The borrowers have three years to rescind.
You definitely want to keep those fingers crossed tho.

Thanks TR for the quick response. That was my thought but it was getting questioned.

The exact wording is

"If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation, upon transfer of all of the consumer's interest in the property, or upon sale of the property, whichever occurs first."

I have a situation simular to skigirl. We have been giving the ROR noticed and the customer has signed, but the LO was having the customer sign on the day the rescission period ended. Funds were not disbursed within the three days. Recently, we just had a compliance audit by our internal auditors and was told to put the loan bach into rescission. I have never heard of putting a loan back into rescission, Is that possible???? If so, how would you go about doing so?

our internal auditors and was told to put the loan bach into rescission.

You are going to have to ask them, because I don't know what they are talking about. And what do you mean the customer signed the form - you mean they signed saying they received the form after the three days had already expired or is there a place on these forms for them to sign to say they are not rescinding????

This is an interesting thread--I have been wondering if a bank is required to tell the customer of the three year extended ROR? Or, as said above, do you just cross your fingers?

Keep your fingers and toes crossed.

The ONLY time I would mention it to anyone is to special assets in the event the customer goes delinquent with the possibility of foreclosure within the 3 years. A cryptic note similar to: "If the bank elects to initiate foreclosure on this loan before XX/XX/XX, refer to the compliance officer or read 1026.23(a)(3)(i)" might be put in file or noted in the customer records,

A cryptic note similar to: "If the bank elects to initiate foreclosure on this loan before XX/XX/XX, refer to the compliance officer or read 1026.23(a)(3)(i)" might be put in file or noted in the customer records,

Cryptic or otherwise, that note would be discoverable and I would not advise it.

The form was signed and dated by the customer on the day the loan was funded. Which was three days after closing but the loan officer failed to get the disclosure signed at closing. So yes, they signed saying they received the form after the three days had already expired. I don't know how you would put a loan back into rescission, really confused on this one.

Well, when I am confronted with such a recommendation I always go back to the source and have them explain what they mean. Ask your audit department.

You cannot put a loan back into three day rescission...ever.
You get one chance at giving rescission correctly.
If you blow that chance, the borrower has three years to rescind the loan.
And I have NEVER in all my years of working in mortgages, heard of an instance when the bank informed the borrower that they had blown RoR and the borrower now had three years to rescind. As stated above, you cross your fingers and toes.

Applicable parts of the Reg include the following:
(b)(1) Notice of right to rescind. In a transaction subject to rescission, a creditor shall deliver two copies of the notice of the right to rescind to each consumer entitled to rescind (one copy to each if the notice is delivered in electronic form in accordance with the consumer consent and other applicable provisions of the E-Sign Act). The notice shall be on a separate document that identifies the transaction and shall clearly and conspicuously disclose the following:
(i) The retention or acquisition of a security interest in the consumer's principal dwelling.
(ii) The consumer's right to rescind the transaction.
(iii) How to exercise the right to rescind, with a form for that purpose, designating the address of the creditor's place of business.
(iv) The effects of rescission, as described in paragraph (d) of this section.
(v) The date the rescission period expires.

The borrower must sign acknowledging receipt of the RoR. I would opine that even tho they may have received it at closing, signing and dating it three days later would most likely be seen as a violation by your examiner.

The borrower must sign acknowledging receipt of the RoR.

One slight correct. There is no regulatory requirement that the borrower sign for the receipt of the right of rescission form (see model forms). They are required to sign the form in order to rescind the transaction.

I fact checked my answer above against this where John Burnett says but then he tags on Richard's answer here at a later date saying
So, I retract my statement that the signatures are required.
However, if you have a form that has a line for signatures on it, I can tell you that secondary market will demand it be signed.
I've also come across examiners that want signatures where there are lines provided for them.

But, it appears that, as long as you can prove the borrowers were given the proper number of copies at the closing table, you may have an argument against a violation in the case the borrowers signed acknowledging receipt three days later.

You might not have a violation, but I wouldn't want to defend the fact in court that I gave them 2 copies and material disclosures without a signature.

Thanks.... I think we will just sit tight for three years on this one.

If you have signature lines for receipt, you should use them.

If the bank does not want to obtain signatures and can turn off the lines (some systems give that ability), remove the signature lines.

I always removed the lines because it eliminated another mistake waiting to happen.

If you can't eliminate the lines, get a new form to use.
Our software system uses Wolters Kluwer forms and I found at least 3 or 4 different versions of the RoR when I last checked their stash.