Refinance - Interest during 3 day rescission period

[kevinheidi]

What is the name of your state (only U.S. law)? Ohio

I am finalizing a refinance loan with a Savings & Loan bank. They told me during signing that I would be charged interest on the new loan starting from the day I signed including the 3 day rescission period. After the signing I got online and found information from HUD saying that banks cannot do that and sent him an email. He is telling me that his bank can do that. He is saying that it is a "Savings and Loan" thing. This information was not disclosed in any way ahead of signing. I had to ask a string of very specific questions to even find out they were going to charge me.

Can they legally charge me interest during the rescission period?

 

[FlyingRon]

Can they legally charge me interest during the rescission period?

Federally there is no prohibition. As a matter of fact, it's specifically allowed. I don't know Ohio banking laws well enough to know if they have a specific rule prohibiting it.

 

[kevinheidi]

Sadly you are right.

Unfortunately, I found you are correct. My lender sent me a copy of Regulation Z that basically says they can charge interest during the 3 day period. I also called the FHA help line. They told me that it cannot be done on an FHA loan, but they didn't have much advice for what my recourse might be if it did happen. Since I am getting a conventional loan, I guess I'm stuck.

Live and Learn. Buyer beware! The sad thing is that most people getting a loan wouldn't take the time required to figure out they were even being charged the extra interest. It certainly wasn't disclosed and was difficult to tease out of all of the numbers that were presented at signing.