Thread Options
#1834924 - 07/22/13 12:22 PM Purchasing - ROR on old res
Tryin-2-Comply Offline
100 Club
Joined: Apr 2003
Posts: 202
Hills of TN
We have a customer who is purchasing a new home. We are taking the current residence as an abundance of caution. The customer is moving the day of the loan closing into the new home. It will be there primary residence. Does ROR apply to the old residence?

Return to Top
Lending Compliance
#1834926 - 07/22/13 12:34 PM Re: Purchasing - ROR on old res Tryin-2-Comply
Skittles Online
10K Club
Skittles
Joined: Sep 2002
Posts: 13,963
TN
Yes, it does. With the exception of the appraisal rules, all other regulations apply when taking a mortgage as 'abundance of caution'.
_________________________
My Opinions Only

Return to Top
#1835004 - 07/22/13 03:00 PM Re: Purchasing - ROR on old res Tryin-2-Comply
RR Joker Offline
10K Club
RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
The rule I have always gone by is "which home will you sleep in the day you close". Based on that, the new residence will be the new home and the old will be their 'second home' until it sells (if they sell it) and ROR would not apply.
_________________________
My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

Return to Top
#1835092 - 07/22/13 04:04 PM Re: Purchasing - ROR on old res Tryin-2-Comply
Skittles Online
10K Club
Skittles
Joined: Sep 2002
Posts: 13,963
TN
Sorry, but I respectfully disagree with Joker. The following is an excerpt from Regulation Z:


4. Special rule for principal dwelling. Notwithstanding the general rule that consumers may have only one principal dwelling, when the consumer is acquiring or constructing a new principal dwelling, any loan subject to Regulation Z and secured by the equity in the consumer's current principal dwelling (for example, a bridge loan) is subject to the right of rescission regardless of the purpose of that loan. For example, if a consumer whose principal dwelling is currently A builds B, to be occupied by the consumer upon completion of construction, a construction loan to finance B and secured by A is subject to the right of rescission. A loan secured by both A and B is, likewise, rescindable.


While this may not be the exact scenario, I believe it's a still valid.
_________________________
My Opinions Only

Return to Top
#1835181 - 07/22/13 06:44 PM Re: Purchasing - ROR on old res Tryin-2-Comply
RR Joker Offline
10K Club
RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
I agree with the above skittles, and in that example, the PR is the 'current residence". That's not the case in the poster's scenario.

(ps) An FRB examiner is who used that 'where you lay your head at' tonight, btw. wink It's always stuck in my head ever since! laugh Maybe I should un-stick it. eek


ETA: ROR was 'invented' to protect a consumer from borrowing against the home they live in and potentially losing it. They no longer live in that home. Do I think there would be a problem in giving it anyway? Absolutely not, it's the same/similar sitch as a bridge loan. Why? Because how do I know for certain they are really moving that very day. Would I accept a letter in writing stating that fact? Yes..been there, done that. Secondary market loans to boot! Usually it was situations where the folks relocated, had already moved, still had a home whereever, but were moving in the home they were closing on...or already lived there.
Last edited by RR Joker; 07/22/13 07:02 PM. Reason: reworded a section for clarity.
_________________________
My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

Return to Top
#1835210 - 07/22/13 07:23 PM Re: Purchasing - ROR on old res Tryin-2-Comply
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,710
Bloomington, IN
The rule I have always gone by is "which home will you sleep in the day you close". Based on that, the new residence will be the new home and the old will be their 'second home' until it sells (if they sell it) and ROR would not apply.

I agree with the above skittles, and in that example, the PR is the 'current residence". That's not the case in the poster's scenario.


You have to look at the status of the property at the time of consummation and at the time of consummation the existing (old) dwelling is the consumer's primary dwelling. The new dwelling does not become the primary dwelling until after consummation and transfer of funds to complete the purchase.

I have to agree with Skittles. Rescission would be required.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#1835224 - 07/22/13 07:53 PM Re: Purchasing - ROR on old res Tryin-2-Comply
RR Joker Offline
10K Club
RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
I do agree and defer to you guys...the more I think about those rare situations...it has been where they'd already moved, like even the day before closing...but at any rate, that's where they were WHEN they closed..not that day.
_________________________
My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

Return to Top
#1835365 - 07/23/13 01:35 AM Re: Purchasing - ROR on old res Tryin-2-Comply
Tryin-2-Comply Offline
100 Club
Joined: Apr 2003
Posts: 202
Hills of TN
Thanks for all the replies and good conversation.

Return to Top
#1835379 - 07/23/13 02:47 AM Re: Purchasing - ROR on old res Tryin-2-Comply
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,965
Galveston, TX
...it has been where they'd already moved, like even the day before closing

How do you move into a property you don't own yet? I think I would forget about that saying from the FRB examiner as it will get you into more trouble than it will keep you out of.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#1835474 - 07/23/13 02:58 PM Re: Purchasing - ROR on old res Tryin-2-Comply
RR Joker Offline
10K Club
RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
Yeah, yeah...I already beat myself up for it!

As to moving in before closing? That really does happen...especially in a military town. wink
_________________________
My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

Return to Top

Moderator:  Andy_Z