We are doing a loan increase for a customer construction loan. She has moved in to the unfinished house that is being built on the property. It is now her primary residence. Does ROR apply for this loan modification?

I'd agree that it applies.

If this is to complete the initial construction of the home it would still qualify as a Residential Mortgage Transaction and be exempt from rescission.

Ok, so the lender has given me some more information. The customer purchased the property with the home on it. Then proceeded to move in while completely remodeling the home. It was classified as a construction loan. Does this change anything?

IMO, yes. Classifying it as a "construction" loan doesn't make it one. It was a home improvement loan and if it's now the primary residence, i would think that ROR applies.

Thank You all for your input. I personally feel it should never have been classified as a construction loan, but I guess that doesn't matter now. My next question would be do the GFE and Truth in Lending apply now as well? Sorry for all the questions, I am not a lender and this loan compliance stuff is still very new to me. Thanks again for all of your help.

Yes. The original loan to purchase and renovate the existing dwelling would qualify as a RMT. However any refinancing of the original loan would not meet the RMT definition. ROR would apply in this case for the new money.