According to the letter of the law, I would agree that Mr should not have ROR according to Reg. Z. Nobody has ever cited a specific state statue to me.
However, rescission is the first thing the borrower's attorney will look at to go after the bank in either foreclosure or bankruptcy. Especially today where written law doesn't matter and banks lose no matter what, I wouldn't take that chance. Our policy (and most local judges) is, if they sign the mortgage, they get ROR.
The only liability that causes is if your non-borrowing releasing dower spouse actually rescinds, the borrower could potentially sue you for giving rescission to someone who shouldn't have the right. If I have to take a risk on one side or the other, I would rather fight to keep my money as opposed to fight to get it back.