HELOC Rescission
Question: We have a customer who wants a home equity line of credit that will be used to purchase a new home. The line will be secured by the home being purchased. Are we correct in thinking that this HELOC is not subject to rescission?
Answer: You are indeed correct. Even a HELOC can be a purchase money loan. When this is the purpose of the HELOC, then it is not a rescindable loan. It would be rescindable, however, if it were used as a bridge loan and secured by the borrower's current (old) principle dwelling.
Copyright © 2004 Compliance Action. Originally appeared in Compliance Action, Vol. 9, No. 11, 10/04
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