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Loan Rescinded Due to TIL Violations

Question: 
When a borrower rescinds a real estate loan on the basis of TIL violations within the first three years, what is the most expeditious manner with which to proceed when it appears that in fact, the loan broker originating the loan, the original funding institution, and the purchasing institution and servicer have not complied with the TIL requirements, to just accept the return of the original amount funded and waive all interest and closing costs?
Answer: 

Answer by Dan Persfull:Review the financial institutions obligations when a consumer rescinds in 226.15 and .23 and their Commentary. All monies paid by the consumer in connection with the transaction must be refunded and you must release your security interest. It is also advisable to contact your attorney. There could very well be a TIL liability action filed against your institution as well.

Answer: 

Answer by Richard Insley:First, I would determine how such a gross error could escape detection. Next, I would conduct an exhaustive file search (outsourcing the work if the project can't be handled within a few weeks) to determine the overall size of the problem. Then, I would develop an action plan for fixing whatever broke down, get it approved by the highest ranking officer in the affected business, and implement it yesterday. Finally, I would deal with the rescinded loan.

First published on BankersOnline.com 11/27/06

First published on 11/27/2006

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