I discovered during a TILA audit that one of our lenders disbursed funds the day before the rescission period for that transaction would have expired. He also had the customers date our Right to Rescind notice (stating they did not wish to rescind) a day early.

Our risk management officer believes we can have them sign another RTR notice (a year later) dated with today's date, and the three day rescission clock would start again, in an effort to avoid the customer having the 3 year time period during which they could decide to rescind.

1026.23(a)(1) states "Delivery of the required notice shall begin the rescission period", but I do not read that to mean you can just provide that notice at any point during the life of the loan and start that period. Once you've disbursed the funds/performed the service, do you not lose the ability to provide the notice and start the clock?

I'm with you. "Delivery of the required notice shall begin the rescission period"....and it did.....back when you gave it the first time and disbursed the funds early. I don't read anything in 1026.23 that allows you a do-over. In fact, i think trying this with a halfway savvy consumer might backfire for you.

JMHO.

That's what I was thinking. Once you've made that error and disbursed the funds, there is no fixing it. We just have to hold our breath for two more years.

In the event of foreclosure that period extends indefinitely until the loan pays off - so someone is going to be very blue holding their breath.

But there is still nothing we can do to correct this error, right?

There is no cure for a right of rescission error outlined in any law or regulation. Prior to a risk management officer attempting to correct something like this, I suggest they sit down with legal counsel. Since there is no corrective action specifically outlined, about all you might find yourself doing is calling the error to the attention of the consumer and thus, increasing your risks.

That's exactly the advise I gave her yesterday. I would hate to call this error to the customer's attention and create a problem that may never have come up. Thank you.