Loan Funds Disbursal

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Question:

Does a consumer home equity loan have to be disbursed when the rescission period is up and it has not been rescinded? What if the consumer does not want it disbursed until 10 days from signing?

Answer:

After the rescission period expires and you're satisfied that the borrower has not mailed a rescission notice you are required by contract to disburse the proceeds. If the borrower wants to pay interest on funds he or she has not received, you can cut the check immediately after the rescission period and (depending on your policy) hold the check for the borrower or mail it to the borrower. If you and the borrower agree to delayed funding and a delay in the beginning of interest accrual, just get the bank's attorney to add additional language to the note for this purpose.

First published on BankersOnline.com 3/10/08