Rescission Woes
By Jerod Moyer
There are many do's and do not's when it comes to compliance. The consumer's right to rescind is a major "do not". As in do not mess it up, or else....
One of the first things I was taught when I started as a Compliance Officer, by those overseeing from the ivory management tower, was to make sure lenders knew how to properly execute rescission. The second was to ensure they were aware of the consequences of non-compliance. Based on Management's tone and the manner it was presented, I understood it to mean "scare the you know what out of them (the lenders)"! So I tried.
Many of you can just about guess how well that went. To the lenders it had to sound as if I was crying wolf. I heard many "yeah rights", "whatever" and the ever popular "nobody ever rescinds" grumbled amongst the masses. However, today some of those same lenders may be thinking of my training sessions as prophetic. That's right I just referred to myself as a compliance prophet (but merely for illustrative purposes).
The reason you see, isn't some sort of new requirement; but, the current economic conditions that have brought the consumer's rescission rights to the forefront. When someone is about to lose their home, one of the first things reviewed by their attorney is the proper execution of rescission - or not.
I encourage you to take a few minutes and review a recent court case, Rand Corporation v. Moua. This case illustrates the importance of properly executing the consumer's rescission rights in accordance with the regulation. You can also read more about this case in the August edition of our "Banking on BCC" subscription newsletter.
By the way, that sound you hear is my wife letting the air out of my big head for that compliance prophet statement! 