Right of Recission

Question regarding a rescinded loan that we are dealing with. Customer signed loan docs and ROR receipt on 4-1-09. The 3 day waiting period would expire at midnight on 4-4-09. The customer called on Monday (4-6-09) morning to indicate that they were rescinding the loan. They faxed us a copy of the cancellation and had dated it 4-4-09. We are not real worried about not getting to book the loan, but what do you think about trying to collect the third party fees (appraisal, title work, etc.)given the discrepancy in the dates?

The decision to rescind can happen anytime within the three days. Therefore the ROR could theoretically be signed as cancelled on 4/2 and be perfectly valid.

They decided to rescind on Saturday and signed it then called you in the morning of the next business day to make sure you didn't go ahead and disperse. I don't think penalizing this borrower in any way is a good business move.

It may not be a good business move but the borrower has the responsibility under 226.23(a) to mail or deliver the rescission notice before midnight of the 3rd business day. They did not mail or deliver the notice until the 4th business day (not counting Sunday).

Under the regulation I do not think they have an obligation to refund any fees.

Thanks for your opinions. I have to agree with you Dan, in that what I read in the Reg, that we would not be obligated in refunding any fees. I am not saying that we won't just let this go, but wanted someone else's opinion on reading the reg.

Before telling the customer s/he gets no refund of the fees, check to be sure there are no flaws in the material disclosures.

I understand where you're coming from but given that the 4th was a Saturday, the borrowers effectively had only till noon to rescind. Unless you addressed Saturday specifically with the borrowers, I wouldn't push the issue.

I can remember a time when we wouldn't count Saturdays as the final day of recission simply to avoid this type of problem. It could be the first or second day, but never the last.

I'm with Truffle on this...because of the weekend situation and because they called monday am, I would consider this a bonafide rescission and do what the law says to do. They probably called sooner than you would have received it in the mail, given the situation.