A closed-end refinance subject to Regulation Z rescission is consummated Monday, June 8. Every consumer entitled to rescind receives the required notice and all material disclosures that day. No waiver or holiday applies, and the creditor is reasonably satisfied that no consumer rescinded. When may it first release the loan proceeds outside escrow?
Correct Answer
D) Funds may disburse on Friday 12 June, once the 3 business days pass
D. Friday, June 12, after the period expires Thursday at midnight. All three triggering events occur Monday, so Tuesday, Wednesday and Thursday are the three counted days. Expiration and reasonable assurance that no entitled consumer rescinded are both required. Scope and exceptions: Money may be placed in a valid escrow arrangement during the period; it cannot be released to the consumer by merely naming the consumer escrow agent. Delayed required disclosures or notices change the timing. Source: Section 1026.23(a)(3), (c); comments 23(c)-2 and -4 — https://www.consumerfinance.gov/rules-policy/regulations/1026/23/
Why This Is the Correct Answer
D. Friday, June 12, after the period expires Thursday at midnight. All three triggering events occur Monday, so Tuesday, Wednesday and Thursday are the three counted days. Expiration and reasonable assurance that no entitled consumer rescinded are both required. Scope and exceptions: Money may be placed in a valid escrow arrangement during the period; it cannot be released to the consumer by merely naming the consumer escrow agent. Delayed required disclosures or notices change the timing.
Why the Other Options Are Wrong
Option A: Funds may disburse on Monday 15 June, after a full 7 calendar days
The ordinary period is not seven calendar days.
Option B: Funds may disburse on Monday 8 June, as soon as the papers are signed
Signing does not end the rescission period.
Option C: Funds may disburse on Tuesday 9 June, the next business day after
Tuesday is only the first counted day.
Exam Tip
Count from the last required trigger, then confirm that no rescission occurred.
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