Can someone clarify when the right of rescission is required on a refinance from the same lender? I'm having a difficult time with the part from Reg Z shown in italics below.

"The right of rescission shall apply, however, to the extent the new amount financed exceeds the unpaid principal balance, any earned unpaid finance charge on the existing debt, and amounts attributed solely to the costs of the refinancing or consolidation ."

Do "amounts attibuted solely to the costs of the refinancing or consolidation" include everything on page 2 of the HUD-1 including funds collected for escrow?

Click here . Be sure to read through he entire thread.

Check out the OSC to that section, in particular OSC 4 to 226.23(f). It gives detailed examples of the kinds of fees that would not trigger ROR, including, for example, insurance premiums.

IMO, assuming the escrow was established for payments you require to make the loan, i.e., property taxes and hazard insurance, then those would be considered "costs of the refinancing", and would not trigger ROR.

I agree with GB.

Great Blue - I read that too. I was just concerned that the escrow cushion for future payments may not be considered the same as amounts due now. But I guess they count too.

Dan - I read it all the way through - very slowly! The discussion used an example of $150 closing costs plus a $100 prepaid finance charge. Are you saying that everything collected at closing, even cushions for escrows, would be treated as the $150 were in the example (except for prepaid finance charges)?

Also Dan, I prefer Al's KISS approach which only requires the R of R if the customer is going to receive a check from loan proceeds. But will that approach be 100% consistent with your more technical calculation?