For loans subject to the federal right of rescission (see, TILA §125(a), 15 U.S.C. §1635(a) and Regulation Z §226.23(a), (b)), the Daniels case is the latest in a long line of federal district and appellate court cases holding that requiring a consumer to sign a post-dated election not to rescind before the end of the three-business day rescission period renders the notice of the consumer’s right to rescind unclear, in violation of TILA, and extends the rescission period for up to three years after consummation. In the past, we have been made aware of instances in which a lender or a title company (without the lender’s knowledge) allowed the consumer to execute and post-date, at closing, an acknowledgment stating that “more than three business days have passed since the closing and that the consumer did not rescind the loan during that time.” We have previously advised you that Regulation Z prohibits this practice, as do the federal courts that have ruled on this issue. In light of the Daniels case, we again remind you to not allow a consumer to execute an acknowledgment within the three-business day rescission period that states the consumer did not rescind the transaction. We also recommend you inform your closing and funding staff and title companies that this practice is prohibited.
