Common Mistakes in Mortgage Refinancing

Earlier, I described what a “Right of Rescission” is in the context of a mortgage refinance.  A summary review of the cases in my office show some of the common mistakes that lenders (and attorneys) make when exxecuting mortgage refinance documents.  A typical Notice of Right of Recission is found here.

An obvious common mistake is not to complete the form in all respects.  Recently, I have seen forms that are missing names or dates or more seriously, the address to which the cancellation must be sent if a rescission is requested.

A common mistake made by many professionals during a mortgage refinance closing is to fail to give the borrowers and owners of the mortgaged property sufficient copies of the notice.  In one case, no copies were given at the closing.  Instead, the junior attorney performing the closing had the borrower sign three copies of the notice stating that she received them, put them in his file, took them back to his office and photocopied them only to deliver the copies to the borrower after the three day rescission period had ended.

The three copies each bear a separate version of the borrowers signature proving that the originals were never delivered to the borrower in case a rescission was requested.  Now, two years later, the lender will have to refund $35,000.00 in interest paid on the loan as the result of the violation.

Yes, Virginia, even lawyers can make costly mistakes.