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More on Interest During the Rescission Period

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With regard to a closed end home equity loan requiring a right of recission, can interest begin to accrue on the date the loan documents are signed or does interest accrual have to begin at disbursement of the proceeds?

Under Federal law (Reg Z) you can charge interest during the rescission period. The Commentary to Section 226.23(c) #3 indicates the creditor may:
a) Prepare the loan check. (date the check as of the loan advancement date)
b) Perfect the security interest.
c) Prepare to discount or assign the contract to a third party.
d) Accrue finance charges during the delay period.

Be sure to check with your State law as several states do not allow interest during the rescission period.

First published on 6/3/02

First published on 06/03/2002

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