[Kim Ashley]

During an audit it was discovered TIL was under-disclosed. The loan was a refinance of an owner-occupied dwelling. The borrower has been refunded the amount that was under-disclosed. Are we required under Reg.Z to re-open the right of rescission period?

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[jholzknecht]

The rescission period lasts until midnight of the third business day following consummation, delivery of the rescission notice, or delivery of all material disclosures, whichever occurs last. If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation, upon transfer of all of the consumer’s interest in the property, or upon sale of the property, whichever occurs first.

You stated that the TIL was under-disclosed. It is not clear what disclosure was “under-disclosed.” Section 2016.23(g) provides tolerance rules for the disclosure of the APR, finance charge and the total of payments. If any of those items was understated by more than the allowed tolerance then the error kicks you into the extended three-year rescission period. “Re-opening the rescission period” does not terminate the extended three year period.

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