We have a closed purchase loan with a huge apr issue. Product was an arm loan and the index wasn't correct. Investor told us we either have to refund the borrower $25,000 or re-close the loan. They would not give us any advice on how you go about re-closing a purchase loan and our compliance person doesn't have a clue. Is this even possible? We had a closer for another company tell us we would have to do a no cost refi at a lower rate (to show a benefit to the borrower)...is this our only option (other than the refund)? Any advice would be appreciated!

Refi is about your only option.

Are you sure you're calculating the reimbursement correctly since this is an ARM?

Let's say your finance charge reimbursement is $1500, 180 month amortization and 60 months to the first change date.

1500 / 180 = 8.33 x 60 = 499.80 reimbursement due.

For a $25,000 reimbursement that had to be one heck of an error.