We have a customer applying for a line of credit and the collateral will be a home they recently purchased that is not their primary residence. There is no outstanding mortgage on the property. Does the right of rescission apply?

For a consumer loan, the answer would be no. See Reg Z section 226.15(a). The key is that it has to be a principal dwelling. Also look at the commentary 226.15(a)(1) paragraphs 5 and 6.

a) Consumer's right to rescind. (1)(i) Except as provided in paragraph (a)(1)(ii) of this section, in a credit plan in which a security interest is or will be retained or acquired in a consumer's principal dwelling, each consumer whose ownership interest is or will be subject to the security interest shall have the right to rescind: each credit extension made under the plan; the plan when the plan is opened; a security interest when added or increased to secure an existing plan; and the increase when a credit limit on the plan is increased.

Ok, that's what I thought. Thank you very much.