What would happen if a Bank disbursed on a HELOC a day before it was supposed to?

You mean prior to rescission expired?

yes

They will retain the right to rescind for three years, they can sue you and also use it to forestall foreclosure.

I have read 1026.23, but cannot find a reference to what you wrote. Can you possible give me the cite to which you refer?

1026.15(a)(3) and the other liabilities are found in the Act itself.

4. Unexpired right of rescission. i. When the creditor has failed to take the action necessary to start the three-day rescission period running the right to rescind automatically lapses on the occurrence of the earliest of the following three events:

A. The expiration of three years after the occurrence giving rise to the right of rescission.

B. Transfer of all the consumer's interest in the property.

C. Sale of the consumer's interest in the property, including a transaction in which the consumer sells the dwelling and takes back a purchase money note and mortgage or retains legal title through a device such as an installment sale contract.

If they choose to rescind during the 3 year period, they are responsible to pay us what ithey drew out of the HELOC, correct?

Yes - and you would owe them all the interest and any other costs imposed to close the loan.

Anon, the weird part is they can close the line, but the lender is still liable for interest and fees until one of the 3 conditions are met. Even if there is a 0 balance, the bank can owe them money.

Rocky P, new anon here:

For the sake of learning something new; could you "close" that current HELOC, transfer the balance to a new HELOC, and have the customer wait the 3 days? Or is it a case of once it's done, it's done?

Also, how does it work if the customer rescinds and is responsible for the balance, but then goes into foreclosure?

For the sake of learning something new; could you "close" that current HELOC, transfer the balance to a new HELOC, and have the customer wait the 3 days? Or is it a case of once it's done, it's done?

It's one and done. They have 3 years to rescind the original transaction or until they sell or transfer their interest in the property.

Also, how does it work if the customer rescinds and is responsible for the balance, but then goes into foreclosure?

Fortunately I've never had to deal with this but it is my understanding if they rescind the loan basically becomes an unsecured loan and your foreclosure basically becomes a law suit to collect an unsecured debt. Someone else may be able to give you a better explanation.