When a loan is refinanced where we were the new and original creditor to the same borrower, are these items considered “amounts attributed solely to the cost of refinancing” and thus do not cause rescission to apply?
1. Initial escrow deposit (old loan was not escrowed and new loan is)
2. Paying a portion of the insurance to get it paid up so we can start escrowing (the customer paid quarterly and we are financing the payment for the last quarter)
3. Delinquent taxes that were discovered during the refinance
I have read the commentary and feel like all of these items (with the exception of maybe the delinquent taxes) would not cause the transaction to have rescission as long as the customer was not given any new money, but wanted to be sure.
I agree with your interpretation – paying delinquent taxes would be considered new money.
From the commentary:
Charges not considered new advances “would include §1026.4(c)(7) charges (such as attorneys fees and title examination and insurance fees, if bona fide and reasonable in amount), as well as insurance premiums and other charges that are not finance charges. (Finance charges on the new transaction—points, for example—would not be considered in determining whether there is a new advance of money in a refinancing since finance charges are not part of the amount financed.)”