Rights, Refunds & Reminders

Check out the latest updates and insights from Melissa Jay Murphy

Dear Members,

Tampa Bay in the Super Bowl????  And I thought 2020 was weird…….

Here are some thoughts on various things that have popped up since my last posting.

Right of rescission review.  This might be a good time to brush up on the details of a consumer's right of rescission under federal law.  Right of rescission is covered by the Truth In Lending Act. At 12 CFR 1026.23(d) Effects of rescission, the mortgage is deemed void and the consumer shall not be liable for any amount, including any finance charge.  The official interpretation explains that “Creditors need not return any money given by the consumer to a third party outside of the credit transaction, such as costs incurred for a building permit or for a zoning variance.” (emphasis mine).  BUT keep reading……

“1. Refunds to consumer. The consumer cannot be required to pay any amount in the form of money or property either to the creditor or to a third party as part of the credit transaction. Any amounts of this nature already paid by the consumer must be refunded. “Any amount” includes finance charges already accrued, as well as other charges, such as broker fees, application and commitment fees, or fees for a title search or appraisal, whether paid to the creditor, paid directly to a third party, or passed on from the creditor to the third party. It is irrelevant that these amounts may not represent profit to the creditor.” (emphasis mine)

So if you close a refinance and your CD includes a title search charge, closing services charge, mobile notary charge, etc., you must refund those amounts to the consumer.  And if it was a cash out refi and the consumer cancels, you cannot then bill the consumer for those charges.  And I suspect that if they come back for another closing (perhaps interest rates went down or they found a better deal elsewhere), you can't incorporate the charges from closing number one.  I confess to having been surprised as this seems a harsh result for a settlement agent.  I researched Westlaw but did not find anything to change my mind the settlement agent has to eat this expense. 

Anyway, food for thought.  Don't violate TILA, please.  I had a client that canceled his rescission THREE TIMES.  So it does happen!

Data Call Reminder.  For those of you subject to the Data Call reporting requirement, don't forget there is a new form to be used!  OIR has modified some of the types of data you must report (added some, deleted some) so it is not simply the same as last year.  Deadline is May 31 to file your report.  If you have questions, we have an in-house expert, Leslie Anderson.  You can reach her at datacallquestions@thefund.com or landerson@thefund.com. 

Last:  Wells Fargo recently issued its 2021 Q1 Settlement Agent Newsletter.  It addresses topics like closing process updates, title order response timing, Florida reduced mortgage and/or intangible tax and related topics.  For your reading pleasure, here is a link to the newsletter.  http://www.thefund.com/information-center/pdf/wells-fargo-sa-newsletter-q1_2021.pdf

That's all for this week.  Let me know how we can help you.

Melissa Jay Murphy
Executive Vice President, Chief Legal Officer,
General Counsel and Secretary