I have a customer asking me this and I really don't know how to answer. They got a Real Estate loan that refinanced existing debt. There were apparently some troubles with the closing documents and a copy machine out of order at the closing table so they were given no copies of anything at the time of closing. They requested copies the following week and got some of them, but the HUD was wrong. They got the rest of the documents from the closing title company a little over a week later. This was in February 2006. They are very unhappy with the new lender and feel since they did not get any copies of the right to rescind the transaction, according to them they didn't get a copy of this document at all, they feel they have the right to rescind that transaction.

They did send an e-mail to the mortgage broker and said they didn't receive the documents and she is currently working on obtaining them per her e-mail to them she will 'have a talk with the title company.' I don't know how they would prove they didn't get the documents at closing, or what they would need to do in order to cancel. They don't want to hire an attorney in case it won't work anyway. Any ideas????

It sounds as if they should have received a RofR. Since they didn't, they can walk away from this loan (interest and fee FREE) for 3 years. They need to hire an attorney.

Whether or not they each got 2 copies of the Right to Cancel is not the important question. I'll bet the facts will show that they signed for receipt of the copies.


Al

Piggybacking on David -

Have them document what occurred.

Save any and all correspondence with the bank, settlement agent, etc.

If the promise to send the documents next week was verbal, send an ambiguous e-mail confirming the conversation - "You mentioned that the XXX, YYY and ZZZ documents would be sent next week. Might we expect to receive them by _______?" Save the response.

See that is my problem for them too Al, they know they signed the right to rescind, but then they never got any copies at the time of closing. They have no proof that they didn't get the documents. They have given me copies of a string of e-mails from them to the broker saying what happened, and that they did get some copies a week later and including an incorrect HUD, and that they got some a few more days after that. The mortgage broker responded they are getting copies for the customer and will speak to the title company. Their e-mail did mention the broken copy machine and the lack of copies at the time of closing. But to me they had already signed saying they got a copy so they have no evidence to bring to a lawyer about what happened. They are still trying to get more corrospondence going with the broker but I know they signed the RTC.

OK. I missed some details. You're saying they believe they got a RofR, they just didn't get one to retain. Reg Z requires 2 copies to be given to each borrower. As Al points out, the bank probably has a receipt indicating they got 2 copies each, but they know they didn't. If they want out of their loan, I think they could probably still fight this and win. It sounds like the bank is in chaos with record retention.

Also, you say the HUD was wrong. How wrong? If they feel there were extra fees added, incorrect disclosures, etc. they may also have a right to rescind as the closing documents didn't accurately portray the transaction (Marta Rodash in 1992 ring a bell?).

I would put this back on your closing agent if they failed to provide the customer copies. You did have an written closing agreement with the closing agent outlining all of your requirements for them to charge a fee - right?

If they were so concerned about the process at the beginning, why did they not pursue it then? Why are they waiting to nearly a year later the think about pursuing this? Are they simply unhappy with the service, or are there bigger issues all connected to the original closing? Are they thinking, HA!, we'll show them?

With the possibility that the lender may have a document that the customer signed saying they recieved the copies, I wonder if they are not a day late and a dollar short?

"But to me they had already signed saying they got a copy so they have no evidence to bring to a lawyer about what happened."

The do have evidence of what happened - their word is evidence. E-mails that they sent shortly after the fact are confirmation that they believed then they didn't get copies - they aren't just making it up now.

On the other hand, the lender will likely have a signed ROR notice that includes an acknowledgment that they received two copies. So there's evidence going both ways.

They need to see a lawyer that understands TILA to sort this out. If they don't, they are likely to hurt their own case in their ongoing communications with the lender.

If they're worried about attorney fees, BQ, why don't they just refinance it and let it be? Taking into consideration that they're first doing something a year later and there's the signed as received vs really recived copies issue, I'm inclined to agree with bbsgrant that they're a day late and a dollar short. I'd suggest they just refi with you and and you cut them the best deal you can.

If I were their friend, I would suggest what TR is suggesting. But (it appears) they are coming to you as their banker with some expertise, not as a friend. They're essentially asking you for legal advice. If they want to refinance with your institution, it needs to be their decision based on advice from someone other than you. Otherwise, you're just putting your own institution in the line of fire. JMO.

I haven't heard from them in a while, but now they are back. I don't want to encourage what they are doing, but they woudl be a good loan to get here. They have gotten the closing agent of the original loan to admit in writing that she didn't give them any copies at closing, including the RTC. They think they can walk away from the whole loan. The loan paid off 2 other mortgages and some other debts. They think if they cancel they walk away from not only fees and interest, but the balance since they didn't get anything in their hand...is this right? Aren't they responsible for the principal??

Yes, and the lender (I hope not your bank) will hot-foot it down to the court to allow them to retain their lien.

Al

Thank goodness it isn't our bank. I think I will explain all they get back is fees and interest, offer to refinance the principal, and be VERY careful with the closing!!