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What are your rights when a mortgage company refuses to let you back out of a refinancing deal?

What are your rights when a mortgage company refuses to let you back out of a refinancing deal? (Tanner Siegworth, KSL-TV)



Estimated read time: 3-4 minutes

HOOPER, Utah — Interest rates are still near record low levels, and that has many homeowners considering a mortgage do-over by refinancing. But when a Hooper woman tried to swap out her old home loan with a new one so she could tap into her home's equity, she found herself stuck — so stuck, she called the KSL Investigators for help.

Judi Morris has been trying to refinance her home. She has dotted all the I's and crossed all the T's on the paperwork to take money out of her home. But she has not received any money.

"They told me it would be 10 days and I would have the cash in hand," Morris told KSL. "And it's been over two months and they're still giving me a hard time."

Turns out, Rocket Mortgage is not accepting the power of attorney she has for her husband who is in a care facility. The document she has is a copy, the original is lost. Morris said the mortgage company scrapped the first signing because of that.

"So, I've been on the phone or email with them nearly every day," she said.

After weeks of that back and forth, Morris finally signed all the paperwork and thought everything was sorted out. Until days later, when she was told no money would be sent because that original power of attorney was still missing.

"I said, 'I have told you guys over and over again, there is no original.'"

And here is where it gets weird: Rocket Mortgage will not let her close the deal, but they also refuse to let her out of it.

"And if they don't fund it, I don't know what I'll do," Morris said.

So, she contacted the KSL Investigators and they looked into the federal rule on a homeowner's right to cancel refinancing.

People have three days to rescind a refinance mortgage, but the clock only starts when they sign the mortgage contract, they receive the Closing Disclosure (sometimes called the Truth in Lending disclosure) form and receive two copies of a document that explains their right to rescind. All three must happen.

Morris said she received no copies of any form at the signing or afterward. When contacted about that, Rocket Mortgage replied with this statement:

"All mortgage lenders are required to follow the guidelines that are created by the entities that insure the mortgage — such as Fannie Mae and Freddie Mac — as well as the local communities where the mortgage is being recorded. We are thankful that, after working with all these groups, we were able to find a solution for our client that allowed her to close on her mortgage."

And just like that, Morris received the money that she said will go toward her husband's care.

"Our main asset is our house, and I was planning on using that to take care of me when I get old," she said. "But I have to have it for him now."

That three-day right of rescission only exists if someone is refinancing. If someone is buying a home with a mortgage — once those closing documents are signed, they don't have a right to cancel.

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Matt Gephardt
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