Loan Admin discovered a loan file that originated last week that was a 1 year open-end LOC secured by a consumer's principal dwelling. The purpose was to purchase another principal dwelling to be rehabbed/constr prior to moving in later this year. The LO who opened this LOC for the consumer was somehow convinced it was a business-purpose loan because the customers are "successful real estate investors". There was no RESPA, no TIL, and no Right to Cancel. Four days after the loan date, the cusotmer took his first draw on the LOC. How do I rectify this situation??? I have calculated the TIL Reimbursement based on the note rate, so it appears that I owe the reimbursement. I believe I should also provide a TIL based on the facts at closing and the RESPA disclosures as well. Do I also now provide a Right to Cancel just to set that date? I need help!?

This is a home equity line of credit and your disclosures should follow the rules in Subpart B of Reg Z, not Subpart C. When dealing with open end credit, reimbursement can't become a factor until you make an error on the first periodic statement.

Richard is correct about the APR. Additionally, you shouldn't have to give any RESPA disclosures on an open-end product. The booklet, mortgage servicing disclosure, GFE & HUD-1 are all exempted for open-ended credit.

I think that you should give a final TIL (again, use the open-ended disclosure requirements of 226.6. The RofR issue is something we have debated here often. You can do a search for "correcting errors," "right of rescission late" or similar posts. I am in the "you can't fix it now" camp, but I know that many other BOL posters feel that you should try to get them a RofR. If you have already advanced the money, you can't give them 3 days before advancing now.

I would give the notice of right to rescind. It won't fix the violation for advancing funds before the rescision peiod expired but I believe it will cut-off the consumer's right to rescind in the future (and recoup all the interest and other finance charges.)

Your biggest problem with a one-of-a-kind revolver is servicing. If the terms your customer and lender dreamed up don't fit what your HELOC system can handle, you'll be forced to service it by hand!