That has always been my impression, Truffle - although I have heard others that differ.

you can close the three year window by giving the ROR late???? Have you actually done this?

I apologize - my impression is similar to yours - that it can't be fixed after the fact. I should have been more clear.

I agree that the violation for disbursing funds prior to expiration of the ROR cannot be fixed, but the 3-year rescission period can be closed. The regulation specifically states that a 3-day rescission period begins the later of three events. See the reference below. If providing the ROR disclosure is the last of those events to take place then the rescission period ends 3 days later even if the ROR disclosure was provided days or months after loan funding.

12 CFR 1026.23 (a)(3)(i) The consumer may exercise the right to rescind until midnight of the third business day following consummation, delivery of the notice required by paragraph (b) of this section, or delivery of all material disclosures, whichever occurs last. 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.

FWIW, I agree with Docs. You can't undo the violation(s), but you can stop the bleeding by ending the rescission period as described.

But -- and this is a BIG BUT -- Sending the rescission notice can be risky if you have a disgruntled borrower who may decide to rescind just to make life difficult. The lender loses all the interest paid by the borrower since closing. There are circumstances where sending the rescission rights notice may be a bad idea, and it certainly needs to be carefully considered before going in that direction.

OK....this is throwing me for a loop!!!

We disbursed funds a day early for a HELOC

I just had one of our two different consulting companies tell me that we can reissue the rescission notice and it would stop the 3 years....

The initial poster is talking about HELOCs but Docs is referring to closed end rescission......

Can this really be done for both open and closed-end rescission.....

If we only did this on a case-by-case basis (when an error is caught very close to closing) could it in anyway be UDAAP??

This has just really thrown me....

I have never heard of being able to 'fix' a rescission issue once the funds have been disbursed.

You could ask the consulting company to explain why they believe the rescission period is extended for 3 years in this circumstance, and then why they believe that providing a new rescission notice would change that.

How much was disbursed and how long has it been outstanding? Read John's comment carefully: "the lender loses all the interest paid by the borrower since closing." In a closed-end credit (except for multiple advance loans like construction), the interest clock has been running on the full loan amount since closing. Unless the error is caught immediately, a sizeable amount of interest has accrued (whether or not paid.) If the customer rescinds, the lender eats it all...plus all the up-front fees. Whether or not to attempt a "cure" is a gamble. If there's a BIG pile of interest sitting there, your decision will very likely be to let sleeping dogs lie.

HELOCs are open-end, so the interest clock may be running on just a small portion of the line. The lender would still eat all of the interest accrued since closing, but the "pile" could be small enough that you're willing to risk a late rescission in order to cut off the ongoing exposure.