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#2112246 - 12/27/16 08:27 PM Rescission for Spouse Giving Up title
Working From Home Offline
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Husband and wife are on title and both live in property currently as their primary residence. They are getting divorced. Husband is refinancing property and wife is giving up her spot on title at the time of the refinance so she will no longer own it. Does wife get rescission?

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TRID - TILA/RESPA Integrated Disclosures Rule
#2112247 - 12/27/16 08:35 PM Re: Rescission for Spouse Giving Up title Working From Home
Truffle Royale Offline

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It depends on whether they are divorced or not at the time of closing.
Also, state laws regarding marital property, etc., will come into play too.
Not enough information here to answer your question with any authority.

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#2112255 - 12/27/16 08:45 PM Re: Rescission for Spouse Giving Up title Working From Home
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They are not divorced at the time. Do you think that makes a difference?? If so, please tell me because I think that Bills v. BNC Mortgage upheld that homestead rights did not create rescission rights. The loan is in the state of Colorado if that helps.

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#2112268 - 12/27/16 09:36 PM Re: Rescission for Spouse Giving Up title Working From Home
Truffle Royale Offline

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Colorado is not a “community property” state, but it does have a category called “marital property.” In Colorado, most assets acquired during a marriage are considered marital property, which is subject to division by the courts in a divorce.

So even if she's off title, if the property was acquired during the marriage, it appears that it is still marital property that only the divorce decree can divest her of.

Consult an attorney for final say...and I'm betting they say to give ROR anyway.

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#2112274 - 12/27/16 10:38 PM Re: Rescission for Spouse Giving Up title Working From Home
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Thanks for the response. We opted to be conservative and give it, but I wanted another opinion as I think Reg Z does not require it in this instance. By the time we take a security interest in the property, she will not be on title, so that is why I think Reg Z does not require it. That is aside from any state law though, which is why we gave it. I hate to be wrong when it comes to rescission and be hanging out there for 3 years!

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#2112770 - 12/30/16 09:26 PM Re: Rescission for Spouse Giving Up title Working From Home
Banker 1025 Offline
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I would like to ask a follow-up question to this scenario. What purpose would you use for TRID? Is this a purchase or refinance? Can a creditor rely on the text in the preamble to TRID that says "The Bureau believes that the general understanding of a "purchase" loan is one where the consumer does not already hold an interest in the property." I cannot find this language in the official commentary/interpretations. Any thoughts would be appreciated.

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#2112789 - 12/30/16 10:21 PM Re: Rescission for Spouse Giving Up title Working From Home
Docs Offline
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A purpose of "purchase" on the LE and CD means the loan is for "acquisition of the property." See 12 CFR 1026.37(a)(9). Since the husband already owns the property the loan cannot be for acquisition. Assuming that an existing loan against the property will be paid off with some of the new loan proceeds, the new loan would be a refinance for TRID purposes. If there no existing loan being paid off then the new loan will be a home equity loan for TRID purposes.
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Just my opinion, I could be wrong. - Dennis Miller

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