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Our Bank currently cuts loan proceeds checks for loans which require a ROR on the same day of the loan closing and retains the checks in the files until the three day rescission period has ended.  They are then mailed to customers or their designates.  My concern is the date on the checks are the same day as the closing. It would be hard to prove that they were not mailed on the same day of closing.

I believe we should not cut and date the loan proceeds checks until after the three day right of rescission has lapsed.  Am I correct?
Proving that you did not distribute the proceeds of the loan until after the three-business-day rescission period has run would be easier if you can prove that the checks were not written until after that period had run. It's not impossible, however, to prove that checks written earlier were not actually delivered until later. For example, Rule 404 of the Federal Rules of Evidence allows you to prove that an action was taken in a particular situation by showing that the action was a "routine practice" in your organization. In essence, someone would have to testify that it was your routine practice to cut checks early and hold onto them until the rescission period has passed, and there's no reason to believe that that practice wasn't followed this time. But it would probably be more persuasive if someone could testify that the date on the check indicates when it was written, and since the date is after the running of the rescission period, the proceeds could not have been distributed too early.

(Posted: 06/29/2007)