I was told today that in a situation where a customer is renewing their existing HELOC (it has not yet matured) into a new HELOC "plan" (from old 5 year draw/10 year repayment to new 35 month interest only) that they have not been providing right of rescission when there is no new money involved. I've tried to explain they are replacing the existing agreement and basically have a refinance. But since there is no new money they didn't think this was required. We're also not satisfying the mortgage.
Satisfying the mortgage plays no roll in whether you have a refinancing or not. It' whether the obligation (the note) is satisfied and replaced with a new obligation (note).
Your original post implies you are refinancing these transactions. If that's the case then I stand by what I have said. New disclosures and the ROR apply. If you are only modifying the terms of the obligation, before its scheduled maturity, then you need to review the Commentary to 226.5b(2) and also 226.9(c) and its Commentary.
No where in Subpart B of Reg Z will you find an exemption from the ROR for these transactions.
So there is nothing "official" that supports this?
Nothing official to support what? My statement is stating you will find nothing in Subpart B of Reg Z, which regulates open-end credit, the exemption from the ROR for no new money as you will find in Subpart C of Reg. Z which regulates closed-end credit. The exemption simply does not exist in Subpart B.
If the customer is just rescinding the "plan", what about the effect to the security interest as indicated in 226.15(d)? See paragraph 2. where it provides that "if the consumer's right to rescind is activated by the opening of a plan, any security interest in the principal dwelling is void." Wouldn't this be related to the opening of a new plan? Do we lose our security interest if they rescind the "plan"?
If you filed a new mortgage for the new plan then yes you must release that mortgage and reinstate the old one. They can only rescind the terms of the new plan. They cannot rescind the terms of the old plan.