Posted by JanetK_CA on 6/26/08 5:02pm
Msg #253150

A caution re: RTC copies - the other side of the coin

I had an interesting conversation this morning at a networking meeting with a mortgage attorney who is now specializing with helping people get modificaton agreements, but is very well connected with various lenders. She says that banks and lenders are now having lots of problems with borrowers trying to get out of their loan with blank RTC forms, saying that they never received one with the dates filled in! This creates huge problems for the lender and can be very costly!

We all know how sometimes packages come with lots of extra copies... Well, this reinforces that we not only need to make sure that the borrowers have at least two filled-in copies for each person, BUT we also need to remove any blank, left over, unfilled-in copies from the borrowers' package and take them with us to shred. The critical part, of course, is the rescission date, but as we all should know, the whole document needs to be properly completed.

In the current market environment, this is becoming more and more of a problematic issue for banks and lenders. Just thought I'd pass that along...

Reply by WDMD on 6/26/08 5:07pm
Msg #253152

I always have the borrowers sign their copies of the RTC in additon to the one sent back to the lender. That being said the borrowers do not have to use the copies provided. I would think the signed copy the lender receives would be proof enough wouldn't it?

Reply by MistarellaFL on 6/26/08 5:16pm
Msg #253157

From what I understand these copies are not even required.
I think Paul posted a a link to part of Reg Z showing this wasn't even required.

Reply by WDMD on 6/26/08 5:44pm
Msg #253159

"From what I understand these copies are not even required.
I think Paul posted a a link to part of Reg Z showing this wasn't even required."

With all due respect, whether it is required or not, if the lender requests or provides enough copies in the package for 2 per borrower then I am going to leave them copies whether required or not.

Reply by MistarellaFL on 6/26/08 5:50pm
Msg #253160

<<<With all due respect, whether it is required or not, if the lender requests or provides enough copies in the package for 2 per borrower then I am going to leave them copies whether required or not.>>>

I agree with you. I have always left copies and have never been asked not to, nor have deviated from what was asked.

The only reason I mentioned this, is because if it is not a legal requirement to leave copies, I wonder how could this hold up in a court of law?

Reply by MistarellaFL on 6/26/08 5:51pm
Msg #253161

Regulation Z to pick apart

Regulation Z

Sec. 226.15 Right of rescission.

(a) Consumer's right to rescind. (1)(i) Except as provided in paragraph (a)(1)(ii) of this section, in a credit plan in which a security interest is or will be retained or acquired in a consumer's principal dwelling, each consumer whose ownership interest is or will be subject to the security interest shall have the right to rescind: each credit extension made under the plan; the plan when the plan is opened; a security interest when added or increased to secure an existing plan; and the increase when a credit limit on the plan is increased.
(ii) As provided in section 125(e) of the Act, the consumer does not have the right to rescind each credit extension made under the plan if such extension is made in accordance with a previously established credit limit for the plan.
(2) To exercise the right to rescind, the consumer shall notify the creditor of the rescission by mail, telegram, or other means of written communication. Notice is considered given when mailed, or when filed for telegraphic transmission, or, if sent by other means, when delivered to the creditor's designated place of business.
(3) The consumer may exercise the right to rescind until midnight of the third business day following the occurrence described in paragraph (a)(1) of this section that gave rise to the right of rescission, delivery of the notice required by paragraph (b) of this section, or delivery of all material disclosures,36 whichever occurs last. If the required notice and material disclosures are not delivered, the right to rescind shall expire 3 years after the occurrence giving rise to the right of rescission, or upon transfer of all of the consumer's interest in the property, or upon sale of the property, whichever occurs first. In the case of certain administrative proceedings, the rescission period shall be extended in accordance with section 125(f) of the Act.
36 The term material disclosures means the information that must be provided to satisfy the requirements in Sec. 226.6 with regard to the method of determining the finance charge and the balance upon which a finance charge will be imposed, the annual percentage rate, the amount or method of determining the amount of any membership or participation fee that may be imposed as part of the plan, and the payment information described in Sec. 226.5b(d)(5)(i) and (ii) that is required under Sec. 226.6(e)(2).

(4) When more than one consumer has the right to rescind, the exercise of the right by one consumer shall be effective as to all consumers.

(b) Notice of right to rescind. In any transaction or occurrence subject to rescission, a creditor shall deliver two copies of the notice of the right to rescind to each consumer entitled to rescind (one copy to each if the notice is delivered in electronic form in accordance with the consumer consent and other applicable provisions of the ESign Act). The notice shall identify the transaction or occurrence and clearly and conspicuously disclose the following:
(1) The retention or acquisition of a security interest in the consumer's principal dwelling.
(2) The consumer's right to rescind, as described in paragraph (a)(1) of this section.
(3) How to exercise the right to rescind, with a form for that purpose, designating the address of the creditor's place of business.
(4) The effects of rescission, as described in paragraph (d) of this section.
(5) The date the rescission period expires.

(c) Delay of creditor's performance. Unless a consumer waives the right to rescind under paragraph (e) of this section, no money shall be disbursed other than in escrow, no services shall be performed, and no materials delivered until after the rescission period has expired and the creditor is reasonably satisfied that the consumer has not rescinded. A creditor does not violate this section if a third party with no knowledge of the event activating the rescission right does not delay in providing materials or services, as long as the debt incurred for those materials or services is not secured by the property subject to rescission.

(d) Effects of rescission. (1) When a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void, and the consumer shall not be liable for any amount, including any finance charge.
(2) Within 20 calendar days after receipt of a notice of rescission, the creditor shall return any money or property that has been given to anyone in connection with the transaction and shall take any action necessary to reflect the termination of the security interest.
(3) If the creditor has delivered any money or property, the consumer may retain possession until the creditor has met its obligation under paragraph (d)(2) of this section. When the creditor has complied with that paragraph, the consumer shall tender the money or property to the creditor or, where the latter would be impracticable or inequitable, tender its reasonable value. At the consumer's option, tender of property may be made at the location of the property or at the consumer's residence. Tender of money must be made at the creditor's designated place of business. If the creditor does not take possession of the money or property within 20 calendar days after the consumer's tender, the consumer may keep it without further obligation.
(4) The procedures outlined in paragraphs (d)(2) and (3) of this section may be modified by court order.

(e) Consumer's waiver of right to rescind. (1) The consumer may modify or waive the right to rescind if the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency. To modify or waive the right, the consumer shall give the creditor a dated written statement that describes the emergency, specifically modifies or waives the right to rescind, and bears the signature of all the consumers entitled to rescind. Printed forms for this purpose are prohibited, except as provided in paragraph (e)(2) of this section.
(2) The need of the consumer to obtain funds immediately shall be regarded as a bona fide personal financial emergency provided that the dwelling securing the extension of credit is located in an area declared during June through September 1993, pursuant to 42 U.S.C. 5170, to be a major disaster area because of severe storms and flooding in the Midwest. In this instance, creditors may use printed forms for the consumer to waive the right to rescind. This exemption to paragraph (e)(1) of this section shall expire one year from the date an area was declared a major disaster.
(3) The consumer's need to obtain funds immediately shall be regarded as a bona fide personal financial emergency provided that the dwelling securing the extension of credit is located in an area declared during June through September 1994 to be a major disaster area, pursuant to 42 U.S.C. 5170, because of severe storms and flooding in the South. In this instance, creditors may use printed forms for the consumer to waive the right to rescind. This exemption to paragraph (e)(1) of this section shall expire one year from the date an area was declared a major disaster.
(4) The consumer's need to obtain funds immediately shall be regarded as a bona fide personal financial emergency provided that the dwelling securing the extension of credit is located in an area declared during October 1994 to be a major disaster area, pursuant to 42 U.S.C. 5170, because of severe storms and flooding in Texas. In this instance, creditors may use printed forms for the consumer to waive the right to rescind. This exemption to paragraph (e)(1) of this section shall expire one year from the date an area was declared a major disaster.

(f) Exempt transactions. The right to rescind does not apply to the following:
(1) A residential mortgage transaction.
(2) A credit plan in which a state agency is a creditor.

Reply by Maranga Ink Resources on 6/26/08 8:21pm
Msg #253195

My experience tell me that I have to provide SIGNED copies back to the borrowers.
Title companies will provide enough copies, make the borrowers signed all the copies and give them at least 2 SIGNED copies back to them. In case the borrower change mind and want to cancel, borrower needs to use these SIGNED copies to cancel and send back to the loan officer.

Reply by Linda_H/FL on 6/26/08 8:56pm
Msg #253207

Some lenders/tc's do give you those specific instructions..

others don't...IMO it's a good practice but it's not required by Reg. Z....that's lender or title specific instruction.

Reply by PAW on 6/26/08 9:10pm
Msg #253211

>>> ... borrower needs to use these SIGNED copies to cancel and send back to the loan officer. <<<

Under Reg Z, the borrower only needs to notify, by varies means, the lender of the intent to rescind. There is no requirement that a particular form be used, nor is there any requirement that the disclosure be signed.

Many lenders require a signature or initial signifying that the borrower received their required copies of the disclosure in accordance with Reg Z.

Reply by MikeC/NY on 6/26/08 6:02pm
Msg #253166

"From what I understand these copies are not even required.
I think Paul posted a a link to part of Reg Z showing this wasn't even required."

Reg Z, section 226.14 (4) (b) says:

"Notice of right to rescind. In any transaction or occurrence subject to rescission, a creditor shall deliver two copies of the notice of the right to rescind to each consumer entitled to rescind (one copy to each if the notice is delivered in electronic form in accordance with the consumer consent and other applicable provisions of the E-Sign Act)."

Those copies of the RTC are required; there's some confusion about whether each party should get a copy of the TIL, and I think that's what PAW was referring to.

Reply by PAW on 6/26/08 9:12pm
Msg #253212

Correct, Mike.

I think the previous discussion was about the TIL.

Reply by PAW on 6/26/08 9:07pm
Msg #253210

Never said that copies weren't required. Reg Z is very clear that two written copies or one electronic copy would need to be left with the borrowers.

There is no requirement that the disclosures be signed or initialed. But there is no exception to the requirement that disclosures be provided.

Reply by lindetteh_PA on 6/26/08 5:08pm
Msg #253154

Bank should have the signed copies n/m

Reply by Linda_H/FL on 6/26/08 5:10pm
Msg #253155

If it's e-docs or O/N to me I always make sure the

borrowers each get two signed and dated copies.

Reply by Lee/AR on 6/26/08 5:25pm
Msg #253158

As other posters have said "the bank had darn well better make sure they hang on to their signed, dated copy with dates completed". As far as 'buyers having blanks'.... sheesh... a bit of whiteout & a scanner or copy machine & I'll give you as many blanks as you want.

Reply by MW/VA on 6/26/08 6:05pm
Msg #253168

I've heard that lawyers were using this as a loophole to try to get people out of bad loans.
We all know they are signing that they acknowledge receiving 2 copies of the RTC. What happens later when they just say they never got their copies. I know I have them sign their copies & I put them on the top of their copy package. If it became a court matter, it would be my word against theirs. All I could say was that I knew I gave them their copies. It should be a mute point, because we know no loan funds without the signed & dated RTC's being in the package.

Reply by CaliNotary on 6/26/08 6:17pm
Msg #253174

MOOT POINT

"It should be a mute point"

I've seen this 3 times over the past few days and it's driving me crazy!

Reply by MW/VA on 6/26/08 6:23pm
Msg #253175

Re: MOOT POINT

Thanks, teacher. What would we do without you being there to correct us?

Reply by CaliNotary on 6/26/08 6:24pm
Msg #253176

I guess you'd continue looking ignorant? n/m

Reply by Sylvia_FL on 6/26/08 6:39pm
Msg #253179

Re: MOOT POINT

"it's driving me crazy!"

Short drive Cali? (jk)

Reply by Lois/PA on 6/26/08 6:43pm
Msg #253180

Re: MOOT POINT

Moot is correct according to the dictionary. It says subject to argument or discussion; debatable; doubtful. (adjective)

Reply by MikeC/NY on 6/26/08 6:50pm
Msg #253183

Re: MOOT POINT

"Moot is correct according to the dictionary. It says subject to argument or discussion; debatable; doubtful. (adjective)"

It also means "already decided or irrelevant", which I think is the usage he intended....

Reply by MikeC/NY on 6/26/08 7:02pm
Msg #253184

Re: MOOT POINT

Maybe a "mute point" would be one that no one is aware of....

Sometimes you just have to roll your eyes and move on to the next message.

Reply by Susan Fischer on 6/26/08 8:12pm
Msg #253193

Cali, Mike and Lee: 3 points. Borrower RTC Defense: Some

will win, some won't. Depends on the facts of the case, and the aptitude of the lawyers and their bloodhound paralegals.

It's part of the trial strategy. Best guess, it's not the only rock in the sack.

Reply by jba/fl on 6/26/08 10:27pm
Msg #253218

Me Too! ugh! n/m

Reply by Marlene/USNA on 6/27/08 12:10pm
Msg #253309

Re: MOOT POINT

"it's driving me crazy"

Me, too, but I've been mute about it. Thanks for speaking up.

Reply by JanetK_CA on 6/26/08 8:23pm
Msg #253196

"What happens later when they just say they never got their copies... If it became a court matter, it would be my word against theirs."

That's probably what she's talking about. I'll ask more about the lender having their signed copy next time I see her -- and about Lee's comments about easily whiting out an creating a blank form. Apparently, though, some attorney's are getting away with it. (Also, this was at 7:00 am this morning, after less than 4 hours sleep, so my mind was pretty much on auto-pilot...) I'll be interested in hearing her response. And thanks for all YOUR responses.

Reply by SheilaSJCA on 6/27/08 9:58am
Msg #253261

I can just see it now, one more doc needing notarization!

If all this is true; that too many people are using it as an escape hatch, after the fact, who knows ?... maybe the lenders will wise up and require that RTC be notarized in the future...that way the signer will have a hard time denying they signed it, IF the notary has a record of it. Wouldn't that solve the problem?

Reply by WDMD on 6/27/08 10:26am
Msg #253271

Re: I can just see it now, one more doc needing notarization!

"maybe the lenders will wise up and require that RTC be notarized in the future...that way the signer will have a hard time denying they signed it, IF the notary has a record of it. Wouldn't that solve the problem?"

Some folks would still deny signing it. I've been called by a couple of lenders requesting a copy of my notary log for borrowers who, when trying to get out of a loan, denied even being at the signing.

Reply by ItsMe123 on 6/27/08 11:41am
Msg #253290

It is the LENDER'S job to send out the RTC correctly

I am not and will not fill out a RTC for a lender.

This is one of the most important docs in a package and if done incorrectly extends the 3 day RTC out to 3 years.
Do you really want to get in the middle of that battle if you make an error on a RTC?
I don't and I tell them I don't.
They need to do fill out legal docs, not me

Reply by docs1954CA on 6/27/08 11:54am
Msg #253296

Re: It is the LENDER'S job to send out the RTC correctly

So, I have to ask: You leave it blank? You have them fax 2 each to the borrowers all filled out?Filling this form out correctly isn't brain surgery....I don't understand how you can get any work with that kind statement to a company that wants to hire you...I'm lost...are you?

Reply by ItsMe123 on 6/27/08 12:28pm
Msg #253317

Re: It is the LENDER'S job to send out the RTC correctly

I have been doing this for years and it has not at all affected my workload.
Maybe it is the approach I take with them, I don't know.

I call the lender directly and explain to them why I need correctly filled out RTC's.
I use the appraoch that this is a SERVICE I am providing THEM rather than a refusal on my part.
I tell them of my experience in origination and that I as a lender have been burned multiple times on a RTC.

The minute I say, "You have so many docs to send out, it has to be so hard not to miss something-- wouldn't it be nice if they could narrow it down to 5 or so?" ... Pause ...

" Anyway I noticed something as I was reviewing YOUR documents. I immediately thought I should place this courstey call to you" --- mention issue ---

"My concern for YOU is that this could cause a late funding issue due to what is an easily correctable document error right now" "Late funding, I know everyone wants to avoid that (add chuckle)".

"I have always viewed my role as making sure YOUR documents are executed to avoid any funding issues -- that's why you have always been calling me the last 7 or so years (add chuckle -- note -- the LO has no idea this is the first time you have been hired by them).

"For me to fill out YOUR RTC would be UPL on my part. This isn't a "good thing" as Martha Stewart would say" (add chuckle -- note this Martha Stewart name drop makes them think of consequences when it is in the same sentence with the word "law"

"I don't want to see this bite YOU down the road either in the next few days or even next few years. " I have always liked working with you so I always keep an eye out for ya'"

"Don't we all know a non-funded laon is a non-payroll loan, hate those" (add chuckle)
"Here is my fax, I am going to keep my eye out for it in the next 5 minutes just for YOU...."

This works every time, they spit them right out.
Never ran into a problem.

Reply by Linda_H/FL on 6/27/08 11:59am
Msg #253302

Disagree with you it'sme123

If provided written instructions that I am to fill the RTC out I'll do it...but what I do is confirm in writing the dates I'm filling in....the few times I've had to do this the company's had no problem with confirming it with me. Filling in the RTC, and/or confirming that the dates are correct (which I've been asked to do) are part and parcel of the Signing Agent responsibility..IMO

Mind you, I've only had to fill the dates in a handful of times - they're 95% of the time filled in when I get the docs.

Reply by ItsMe123 on 6/27/08 12:34pm
Msg #253318

Re: Disagree with you it'sme123

NO way-- you go into court when a lender and borrower are battling TILA and you are going to see the lender hang you out to dry. You WILL become a defendent. They are going to claim the LO or whoever sent you the email had no authorization to do so. WORSE is they are going to say you are guilty of UPL.
And they are right, you will lose.
It is your choice, everyone has their own risk margin, it is just out of mine.

Reply by ItsMe123 on 6/27/08 12:41pm
Msg #253321

Also are you a notary or a Signing Agent?

If you are an "agent", whose "agent" are you? Think about that, whose "agent" are you?

When you are closing a loan, you are acting in a role as a notary.

You are not part of the escrow team, you are not part of the lending team. You are a subcontracted NOTARY who has to go by the state notary laws. You are noone's "agent" but your own and in court, noone is going to claim you as their "agent"

Sure they love you doing it at the time, it is easier -- Their legal team will also love that you did it down the road -- they have a TILA out, problem is their out is you.