Someone refresh my memory. Is is a problem if we enter the wrong expiration date on the Notice of Right of Rescission and give the borrower MORE than three days.

Everything I am reading indicated the date must be EXACT. I know I have read posts about this before, but some of the responses are not on point.

Thank you in advance for your response.

The usual argument is that it must be the exact date because this is what is stated as one of the five required items that is to be included on the right to cancel notice. But take a look at the following from the Reg Z commentary for the model notices, it seems to indicate that the way the model notice is written allows for times when the exact date will not be on the notice.

"11. Models H-8 and H-9. These models contain the rescission notices
for a typical closed-end transaction and a refinancing, respectively.
The last paragraph of each model form contains a blank for the date by
which the consumer's notice of cancellation must be sent or delivered. A
parenthetical is included to address the situation in which the
consumer's right to rescind the transaction exists beyond 3 business
days following the date of the transaction, for example, where the
notice or material disclosures are delivered late or where the date of
the transaction in paragraph 1 of the notice is an estimate. The
language of the parenthetical is not optional. See the commentary to
section 226.2(a)(25) regarding the specificity of the security interest
disclosure for model form H-9. The prior version of model form H-9 is
substantially similar to the current version and creditors may continue
to use it, as appropriate. Creditors are encouraged, however, to use the
current version when reordering or reprinting forms."

See the preamble to the latest Commentary update (4/9/02), 67 FR 16981, middle column, first paragraph, discussing the change in the comments regarding the definition of "business day":

"The comment is being adopted as
proposed. The comment does not
represent a new rule, but merely restates
and clarifies the requirement contained
in section 226.2(a)(6) of the regulation.
Consumers? ability to exercise their right
to rescind is not affected because
consumers can mail a notice of
rescission on the observed holiday; the
notice is not required to be postmarked
or delivered on that day. Consumers are
not likely to be confused because the
rescission notice must indicate the
specific date that the rescission period
expires. See § 226.15(b)(5),
§ 226.23(b)(1)(v). A creditor may extend
the rescission period at its option." (emphasis added)

The publication is at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=2002_register&docid=02-8373-filed.pdf

Howard, I have read this preamble as well, and unfortunately it is not included as part of the Official Staff Commentary (I wish it would be for clarification sake), the federal registrar is the only place it is printed. So while it is interesting, I am not sure how "Official" or binding it can be. Has anyone out there in BOL land ever been cited during an exam for this issue? I have heard that examiners will not cite an incorrect date on the RTC form and will only check to see that the loan proceeds are not disbursed early. As far as potential civil liability goes the only cases I have seen this as an issue are in Bankruptcy Courts, which suggests to me that the better solution than having loan officers worry about correcting the date on the RTC form would be to have them spend more time on loan underwriting.

I have been examined by all 4 banking regulators and have never seen them bat an eye at a rescission notice that gave the customer another day or two. Also, what court would find against the bank for providing additional time to the borrower - how are they damaged?? This is a lot different situation then even the court cases citing the use of the wrong notice.

rlcarey, Did the examiners ever write you up or discuss the need to correct a notice that had an incorrect date, before or after the actual date? The last paragraph of the Model Notice seems to provide for times when the date on the notice will be incorrect (before or after the actual date).

how are they damaged??

Just for discussion:

If you are charging interest from the note date, and by givng them an extra day or two, you are depriving them the use of the money while charging them for it.

Now, we weren't cited (nor was there any mention in the audit report) for giving the extra day or two, but we were counciled that our dates should be accurate. (FDIC)

Well, of course the dates "should be" accurate and I would not advocate making it a practice of not making them accurate. But I would fight any regulator that tried to site me for an occasional mistake (as long as we gave the customer a longer rescission period).

As far as a regulators recommending that we send a corrected notice, I think it has been pretty much resolved that there is no correcting a right of rescission error by just giving them a corrected notice later. If want to give them a new right a rescisssion - go ahead, but I would rescind the transaction as a consumer and make you pay me back all of the fees and interest you have charged to-date.

What was happening, prior to me coming here 16 to 17 mths ago, they were not counting Sat. as a business day because we don't have any branches opened on Sat. So there were "several" miscalculated dates.

Does anyone have the customer sign the Right of Rescission on the date the loan is actually funded? Our old loan software provided a dated signature line for the loan date and the funding date. Our new software does not, and we are at odds over whether or not we should continue the practice of having the customer sign on the date funds are released. It does help further an audit trail.

I've worked in banks that did or did not. The problem that we were having was that customers did not want to come back in and sign and the loan officer would have them sign ahead of time. We were under the impression that that might void the right of rescission if the customer complained that they really wanted to rescind, but the loan offer coerced them into signing the waiver early. It goes both ways.

I'm of the belief that we are better safe than sorry. Have them come back in to sign the second time and explain it in a nice way. Don't let your officers coerce a customer into signing early. That just gives your customers the impression that you are a bank that will break the rules if something is inconvenient.

The regs don't say you can automatically release the funds after midnight of the third day. They say you can only release the funds after midnight of the third day AND you are reasonably certain that the borrower did not exercise their right to rescind. How can you be reasonably certain that they did not rescind sometime on that third day if you don't have them sign something that says they didn't rescind? The reg commentary says that if you don't have them sign something, you probably ought to be waiting until like the 4th or 5th day after to fund the loan, to be certain no mailed rescission is coming in. That's where the process of having them sign after the expiration of the rescission period originated. It's a way of allowing us to release the funds sooner than we would otherwise be allowed to do. Yes, it is inconvenient for the borrower to have to come back, but that inconvenience may be less than the inconvenience of having to wait a few more days for the money.

All very good and valid points and like I said I have seen it go either way. IMHO - I have seen so few transactions rescinded in my career, I wouldn't bother the customer with coming back in, nor would I wait an extra day or two to disburse money.