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#4881 - 09/25/01 04:14 AM Full rescission not given
BankerMama Offline
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BankerMama
Joined: Jun 2001
Posts: 1,543
Am I correct in thinking if the FULL three days rescission rights were not given the customers would have 3 years "free ride" as when no rescission rights were given at all?

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General Discussion
#4882 - 09/24/01 05:02 PM Re: Full rescission not given
Andy_Z Offline
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Andy_Z
Joined: Oct 2000
Posts: 27,748
On the Net
Yes. 226.23(a)(3) defines the triggers for 3 days or 3 years. Para. (b) mentioned below, is the rescission form.


(3) The consumer may exercise the right to rescind until midnight of the third business day following consummation, delivery of the notice required by paragraph (b) of this section, or delivery of all material disclosures, whichever occurs last. If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation, upon transfer of all of the consumer's interest in the property, or upon sale of the property, whichever occurs first. In the case of certain administrative proceedings, the rescission period shall be extended in accordance with section 125(f) of the Act.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

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#4883 - 11/15/01 03:41 PM Re: Full rescission not given
jbest Offline
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jbest
Joined: Jan 2001
Posts: 134
Is there a cure for the rescission error of not allowing the 3 days? For instance, if the error was a typing mistake and only allowed 1 day instead of 3, however the loan was funded on the proper day, and it's a secondary market loan already funded/sold.
What corrective action do we take if any?

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#4884 - 11/15/01 10:41 PM Re: Full rescission not given
Way Out West Offline
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Way Out West
Joined: Jun 2001
Posts: 246
San Francisco
"Is there a cure" is the $64,000 question (literally!) and I don't know that it has ever been fully answered. I think most lawyers would say no, you can't undo an ROR mistake by offering the borrower another right to rescind. Whatever you do, the loan has already been funded prior to delivery of the correct ROR notice. As far as "typos" are concerned, do you really think the borrower's attorney is going to let you off the hook because you say "sorry, it was just a typo"?

The only 100% guaranteed fix is to refi your own loan, an expensive proposition. Good luck.

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The opinions expressed are mine and not those of my employer

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The opinions expressed are mine and not those of my employer

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#4885 - 11/16/01 12:46 AM Re: Full rescission not given
Lucy Griffin Offline

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Lucy Griffin
Joined: Nov 2000
Posts: 1,544
There are two ways to read the rescission paragraph Andy cited. There is the tough interpretation that only one or the other situation can happen. Then there is the softer read (and I prefer this one) that the three years only becomes the measurement if there is a total failure to provide material disclosures and the rescission notice. Following this reasoning, you can provide a new rescission notice for a full three-day period and thus place a time limit on the rescission.

However -- there is a big risk in doing this. By providing the revised notice, you call the customer's attention to the fact that there is an error. All the customer has to do is not sign the new notice and you're still facing three years. It's a judgment call as to whether you give the customer the revised, corrected notice or wait it out.


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#4886 - 11/16/01 07:11 PM Re: Full rescission not given
SteveG Offline
Member
Joined: Jul 2001
Posts: 58
I prefer the "give a new notice" alternative to the "hold your breath and wait the 3 years out" option. I think that there is a good argument that the three days effectively run this time around because all the material disclosures have been given, the loan is consummated and three days have run. I don't feel they have to sign anything; you need to prove delivery of the right to cancel. I would be prepared to run into court (in case they exercise the right to cancel) to proffer a release in escrow and seek injunctive relief requiring payoff against the release coming out of escrow.

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#4887 - 11/17/01 02:35 AM Re: Full rescission not given
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Steve - if you have already extended funds, a new notice doesn't do anything (except tell the borrowers that you messed up). You must deliver a notice and wait 3 days before extending funds. After extending funds, nothing else matters.
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http://www.bankerscompliance.com

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