Reg Z: Rescission

Posted By: SallyGirl

Reg Z: Rescission - 09/08/21 04:48 PM

For an electronic closing on a HELOC loan, borrowers signed the Credit Agreement on Sunday, 8/15/21. The Notice of Right to Cancel and material disclosures was provided on the prior Thursday, 8/12/21. Does the ROR expire on Monday, 8/16/21 or on Wednesday, 8/18/21?
Posted By: rlcarey

Re: Reg Z: Rescission - 09/08/21 05:08 PM

Paragraph 23(a)(3)
1. Rescission period. i. The period within which the consumer may exercise the right to rescind runs for 3 business days from the last of 3 events:

A. Consummation of the transaction.

B. Delivery of all material disclosures.

C. Delivery to the consumer of the required rescission notice.

Since the loan was not consummated until the Credit Agreement was signed, then it would be Wednesday.
Posted By: Skittles

Re: Reg Z: Rescission - 09/08/21 05:10 PM

I agree with Randy. You can fund on Thursday.
Posted By: Skittles

Re: Reg Z: Rescission - 09/08/21 05:11 PM

Curious - what date did you put on the rescission notice as to it's expiration if it was provided prior to the credit agreement/
Posted By: SallyGirl

Re: Reg Z: Rescission - 09/08/21 05:18 PM

8/16/21.
Posted By: SallyGirl

Re: Reg Z: Rescission - 09/08/21 05:20 PM

Thanks Randy for confirming my thoughts on this.
Posted By: rlcarey

Re: Reg Z: Rescission - 09/08/21 05:21 PM

Then you need to hold your breath for three years.
Posted By: SallyGirl

Re: Reg Z: Rescission - 09/08/21 05:33 PM

Material disclosures were provided the same date as the ROR Notice. Customer
took a few days to sign the Agreement.
Posted By: rlcarey

Re: Reg Z: Rescission - 09/08/21 06:01 PM

Correct and your right of rescission notice told the borrower that their right to rescind expired at midnight on 08/16 rather than 08/18, which blew your right of rescission window and extends the right of rescission for three years.
Posted By: John Burnett

Re: Reg Z: Rescission - 09/09/21 03:31 PM

Randy, in a case like this, could the rescission problem have been avoided if the lender had provided a new rescission notice with the correct date when the agreement was signed?
Posted By: rlcarey

Re: Reg Z: Rescission - 09/09/21 04:19 PM

Technically, yes. Although then you might have an examiner asking about customer confusion and UDAAP in providing the consumer with multiple rights of rescission with various expiration dates, but that is the way I would have definitely gone.

Or technically, I believe that you could have provided it even later and given them three business days from the delivery of the right of rescission notice with a proper date three business days in advance, as long as it was prior to allowing any draws. Once the first draw was allowed - the goose was cooked.
Posted By: CRL

Re: Reg Z: Rescission - 10/26/21 04:05 PM

We have a case where closing date was 10/18 for cashout refi, and borrowers were provided rescission notice.. Condition of closing was receipt of hazard insurance binder, which was expected prior to closing - but borrower didn't accept proposed coverage/premiums and wanted to shop for alternative insurance. He now has paid the insurance premium and provided the binder, and wants loan to fund. Do we need to send a new rescission notice today and give an additional 3 days? The CD changed only for the estimated taxes & insurance on pg 1 (there is no escrow account), the amount of prepaid insurance on page 2, and for estimated property costs over Year 1on pg 4.
Posted By: rlcarey

Re: Reg Z: Rescission - 10/26/21 05:27 PM

You closed a consumer loan with pending conditions outstanding and delayed funding because of it? I hope all of that was in writing. You are really out in no-man's land. However, those actions would not restart rescission.

I would not suggest making a habit out of this practice.
Posted By: CRL

Re: Reg Z: Rescission - 10/26/21 06:37 PM

Thanks Randy, agreed, unique situation that in retrospect we should have delayed closing, but all was documented and made to accommodate borrower's requests. We will provide a revised CD to reflect the actual hazard insurance premium.