I have seen Rescission forms that require a applicant to return after the 3 day rescission period to sign that they did not wish to cancel.However i have seen other rescission forms that do not require the applicant to return. The expiration of the 3 day waiting period is the indicator that the applicant did not wish to cancel. Which is right?? Both?

We just assume if the borrower does not send in a signed copy of their NRTC within the 3 day period (or notify us that the NRTC is coming) that they did not want to cancel and we therefore proceed with funding. I have worked for a big bank and, now, a big credit union, and they both operate similarly in this respect.

Same for all the banks where I have worked. We've never made any customer sign that they do not intend to recind.

The rescission form does not need to be signed (that they received it or that they have waited). Some banks require that the borrowers sign the form to prove that they didn't rescind. Most don't.

Reg Z does not require a signature relating to rescission… unless the customer rescinds. Many banks want to mitigate the risks of rescission and want not only a signature acknowledging receipt of 2 copies of the notice… but require certification that the transaction has not been rescinded. Many others see little risk and perhaps just require a signature acknowledging receipt and do not require certification.

Reg Z does not specifically require confirmation, it does requires us to delay action until the rescission period has expired "and the creditor is reasonably satisfied that the consumer has not rescinded" per 226.23(c). In addition, the commentary goes on to say that:

"When more that one consumer has the right to rescind, the creditor cannot reasonably rely on the assurance of only one consumer, because other consumers may exercise the right."

Based on that statement, determining whether the bank complied with the regulation is based on whether the bank could be "reasonably satisfied that the consumer has not rescinded".

We always like proof. Usually, the customer signs after the three day waiting period, when they get their funds. Otherwise, we will have the loan officer intial that the customer did not rescind. Just tracing when the loan proceeds go out will prove that we waited the recission period.

Bumping this back up to ask if anyone who sells on secondary market finds their investors requiring borrowers' signature as proof of not rescinding prior to purchasing the loan.

We have an investor here that is requiring it. The funny thing is that I personally closed a loan directly with the investor and they just sent me a check on day 4. Is this a case of the right hand not knowing what the left hand is doing? It's making life a bit tougher for us here.

We sell to FNMA and they do not require it.

In my prior life as a regulator, must institutions had the customer acknowledge receipt of the disclosure but not that the rescission period had expired. I wrote many violations on the latter since many times both were signed at the same time, or the three day period had not expired when it was signed. I only see problems when you require that the form is signed twice.

But, as noted above, section 226.23(c) of Reg Z states that you must wait until the rescission period has expired "and the creditor is reasonably satisfied that the consumer has not rescinded."

What do you do to prove you've met the second half of the requirement?

We considered ourselves "reasonably satisfied" that a consumer has not rescinded if (1) we have not received the NRTC within the rescission period, and (2) if we have not heard from them by the end of the rescission period.

You send the check out in the late afternoon mail?

No, seriously, I think that waiting until the fourth day with no contact is an industry standard. In one instance where I personally rescinded a loan, I knew it was my responsibility to make sure the lender knew it.

Maybe that's the bottom line here. How savy is the average borrower and how much of a safety net is reasonable.

What about everyone else? If you're not getting a confirmation is your procedure for making sure the bank is "reasonably satisfied the consumer has not rescinded" based on just waiting until the morning after the rescission expires and no longer?