Skip to content
BOL Conferences
Thread Options
#20761 - 06/13/02 09:33 PM does right of rescission apply?

I'm doing a transaction for a consumer who is buying a new home to reside in, however, his existing home is not sold, therefore I will also take his equity in this home until sold, i.e., swing loan. My question is does the right of rescission apply in the home we would be taking as additional collateral?

Return to Top
Lending Compliance
#20762 - 06/13/02 09:57 PM Re: does right of rescission apply?
Lestie G Offline

Power Poster
Joined: May 2002
Posts: 3,608
Near the Land of Enchantment
The commentary for Reg Z addresses bridge (swing) loans specifically:

226.23(a)(1) -4 says, "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.
Opinions my own.

Return to Top

Moderator:  Andy_Z