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#1454532 - 10/13/10 03:08 PM Right of Rescission Question
#12 Offline
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Joined: Jun 2005
Posts: 1,338
Open end credit question:

I have a lender who refinanced a $100,000 HELOC into another $100,000 HELOC (he said he renewed it, but he did a new note, so I'm calling it a refi). He claims that the right of rescission should not apply to the new note as there was no new money, no new security interest. I was under the impression that on a HELOC, the right to rescind should always be provided when they signed the note. So I started reading to find the exact citation to back me up.

In my reading, I found that 226.15(a)(1)(ii) states that the consumer does not have the right to rescind each credit extension made under the plan if such extension is made in accordance with a previously established credit limit for the plan.

Does that apply to my situation? Any help offered would be appreciated.

Thanks!
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#1454578 - 10/13/10 03:42 PM Re: Right of Rescission Question #12
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,234
Galveston, TX
No - it is a new plan, it is not a extension of credit under the old plan. There is no refinancing exemption in the open-end credit rules (226.15) like there is in the closed-end credit rules (226.23)for the right of rescission.
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#1454777 - 10/13/10 06:37 PM Re: Right of Rescission Question rlcarey
#12 Offline
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Joined: Jun 2005
Posts: 1,338
Thank you!

Now, if he would have just modified the original HELOC (prior to maturity) to extend the maturity date, would rescission have been required for that?
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#1454794 - 10/13/10 06:55 PM Re: Right of Rescission Question #12
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,762
Bloomington, IN
No, that would not be a new plan provided the modification did not increase the LOC. In that case the ROR would apply.
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#1454804 - 10/13/10 07:04 PM Re: Right of Rescission Question Dan Persfull
RR Joker Offline
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The Swamp
Dan, did you mean, would NOT apply?
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#1454808 - 10/13/10 07:09 PM Re: Right of Rescission Question RR Joker
#12 Offline
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I think he meant that if we increased the LOC, that RoR would apply.
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#1454809 - 10/13/10 07:11 PM Re: Right of Rescission Question #12
RR Joker Offline
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RR Joker
Joined: Nov 2002
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The Swamp
ah, yes, that's exactly what he did! LOL! oops.
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