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#31859 - 09/10/02 01:44 PM Truth in lending Rescission
Anonymous
Unregistered

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.

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Lending Compliance
#31860 - 09/10/02 02:17 PM Re: Truth in lending Rescission
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,765
Bloomington, IN
Is this a new loan request, or is this a counter offer to an existing loan request? I would vote to treat it as a counteroffer. The borrower did not accept your original loan terms and the LO re-negotiated/countered a new loan term which apparently the borrowers accepted. I would not require a new application, but I would have new early disclosures given to reflect the change in terms.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#31861 - 09/10/02 03:04 PM Re: Truth in lending Rescission
Anonymous
Unregistered

I would not define as a counter-offer, because the initial terms were first accepted. The borrower apparently thought his payments were too high on the first loan terms. He then rescinded the transaction.

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#31862 - 09/10/02 03:26 PM Re: Truth in lending Rescission
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,765
Bloomington, IN
Yes, he thought it over and decided he did not like the origional loan terms (in this case the payments), therfore he did not accept the loan terms by rescinding the transaction. A counter was made to him by the LO and he accepted the new terms, unless he rescinds again. I would still treat it as a counter-offer. If he did not accept the new terms, then of course I would immediately proceed to satisfy the requiements for when a borrower rescinds a transaction.
Last edited by dpersfull; 09/10/02 03:31 PM.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#31863 - 09/10/02 07:55 PM Re: Truth in lending Rescission
Anonymous
Unregistered

You are not required to provide the early disclosures again. This is still the same application, the terms were just changed.

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