Assessing Interest

When rescission applies, we are assessing interest beginning on the loan closing date. For example, the loan c;psomg is 9/1...rescission applies, and the loan is funded after midnight of the third day...the interest for that loan begins on 9/1....

During an review by outside auditors, this was mentioned as being incorrect.... I don't agree. The funds for this loan has been set aside....placed in a Reg Z account for distribution at the appropriate time.....

Are they correct?

Reg Z does not prohibit this practice but if you are in IN you are violating State law.

Thanks Dan....

I'm in Louisiana....guess I'd better look at our state law....

Thanks again

Oh my....we can't do it either....

I'm new to the compliance arena. Does anyone have or is there a reference guide for state law that you find helpful? I seem to go around in circles trying to find our state law information.

First try your Department of Financial Institutions Web site (or whatever the department in your state is called that regulate banks) for a link to the statutes. If nothing there try your State banking association.

I have found that most state laws are difficult to search primarily due to the variation of terms used such as late charge is referred to as a delinquent fee and an extension fee is a deferral fee, etc.

The bank still has use of the funds, and the borrower doesn't have access to them. I don't understand why it would be okay to charge them interest.