Lending unit wants to offer repricing program to existing customers with fixed rates to convert an ARM and reamortize over the remaining life of the loan.

Processed as streamlined refinance: same borrowers, same collateral, same maturity, no cash. New note reflects existing principal, earned interest, title insurance modification cost, etc. All associated with closing, all bona fide and reasonable, and are clearly not subject to rescission based on official interpretation.

Business considering charging an origination fee which will exceed any reasonable amount needed to cover transaction overhead; will generate some fee income. For customers that do not have cash on hand to pay the origination charge, business wants to offer to roll the charge into the new principal balance.

Could this be viewed as a "new advance" that could be subject to rescission? We're paying ourselves above and beyond the costs of services necessary for the refinance and the customer might financing it in some cases, so my initial thought was, yes, that amount is subject to rescission when it's advanced as principal.

I have not been able to find anything on the forum specific to this scenario, sorry if I am beating a long dead horse.

23(f) - Comment 4

For purposes of the right of rescission, a new advance does not include amounts attributed solely to the costs of the refinancing. These amounts would include §1026.4(c)(7) charges (such as attorneys fees and title examination and insurance fees, if bona fide and reasonable in amount), as well as insurance premiums and other charges that are not finance charges. (Finance charges on the new transaction—points, for example—would not be considered in determining whether there is a new advance of money in a refinancing since finance charges are not part of the amount financed.)

Well this is a "duh" moment for me. I'm not sure how I missed the last sentence of the interpretation when I was reviewing rescission applicability.

Thanks for getting me back on track Randy