Loan applicants exercised their right to rescind a real estate loan application on the last date, prior to the midnight cut off. The lending officer re-negotiated with the applicants the same loan with same purpose of refinance an existing mortgage with another lender. After the negotiation, the loan term was extended for the purpose of reducing the monthly payment. For the new documentation, the same loan application was used, no new RESPA disclosures were provided, an initial truth in lending was not provided, just the final truth in lending, a new note dated 9-11-02, HUD 1A, and mortgage; all effective 9-11-02. A new right of rescission will be provided and and new three day waiting period began after consumation on 9-11-02. No money will be released, the new rescission period ends on 9-14-02.
What are the consequences here. The Z Commentary addresses the material disclosures in paragraph 15(a)(2), but nothing about how to handle this situation.
My recommendation to the LO will be to initiate a new application, new preliminary disclosures of Z and RESPA.