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?

Yes, it does. With the exception of the appraisal rules, all other regulations apply when taking a mortgage as 'abundance of caution'.

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.

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.

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. It's always stuck in my head ever since! Maybe I should un-stick it.


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.

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.

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.

Thanks for all the replies and good conversation.

...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.

Yeah, yeah...I already beat myself up for it!

As to moving in before closing? That really does happen...especially in a military town.