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#1624427 - 11/04/11 01:40 PM Rescission on HELOC closed simultaneously w/Perm
crlittle63 Offline
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Joined: Dec 2010
Posts: 10
We closed a construction loan for a customer. Now our mortgage company is ready to close the permanent loan. They want to close a HELOC simultaneously with the perm loan. Since the customers have never lived in the house, would Right of Rescission still apply on the HELOC???

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#1624429 - 11/04/11 01:41 PM Re: Rescission on HELOC closed simultaneously w/Perm crlittle63
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Yes it applies, except for any funds that go towards the purchase/payoff of the construction loan.
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#1624691 - 11/04/11 06:27 PM Re: Rescission on HELOC closed simultaneously w/Perm Kathleen O. Blanchard
crlittle63 Offline
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Joined: Dec 2010
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Thanks, Kathleen, but I'm still a little confused. Are you saying you can payoff the construction loan without having to wait for rescission, but can't take a draw for anything else (like fee or such) until rescission has expired?? That doesn't sound right. How can you have rescission apply to part of the money and not all? What happens if the customers Rescind? How can they just rescind on part of the proceeds? Please explain.

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#1624702 - 11/04/11 06:39 PM Re: Rescission on HELOC closed simultaneously w/Perm crlittle63
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Search the threads using +purchase +money +HELOCs as the search term and you will find tons of previous discussions on this topic.

To support what Kathleen stated you will need to look to the Commentary for 226.15(f). The initial advance that qualifies as a residential mortgage transaction, see 226.2(a)(24) for its definition, is exempt from the ROR but all subsequent advances would not be.
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