I've been searching old BOL threads, but can't seem to find an answer to my question (doesn't mean it's not there). I'm hoping someone would be able to assist.

On a first and junior mortgage (closed end) that are both taken out on the same day, does a right of recission need to be given on the junior mortgage?

It appears to me that it should be given, but am finding loans where lenders aren't providing them on the junior lien.

Thanks for your input.

I was told years ago by the FDIC that if you're closing a RMT along with a purchase 2nd mortgage simultaneously, that a rescission is not required on the 2nd. These are happening more and more with 80/10/10 loans.

I agree. Rescission applies if the bank is encumbering a previously unencumbered primary residence. If the acquisition loan and second mortgage are occuring at the same time the encumbrances will occur at the same time and then the property will become the residence of the borrower. Rescission does not apply.

It's rare but possible for someone to already own their home and are now getting the 1st and 2nd mortgage product described. Then rescission would apply.

I also agree - in fact the commentary covers this:

"The lien status of the mortgage is irrelevant for purposes of the exemption in Sec. 226.23(f)(1); the fact that a loan has junior lien status does not by itself preclude application of this exemption. For example, a home buyer may assume the existing first mortgage and create a second mortgage to finance the balance of the purchase price. Such a transaction would not be rescindable."

Exactly. A purchase money loan does not have to be in first position. A second trust purchase money would not be rescindable even if another lender -- or the seller -- holds the first trust. The key issue is the purchase status, not the lien position.

Could someone tell me if in this same scenerio whether or not a junior mortgage would be reportable for HMDA purposes?

Yes, it would be reportable as a purchase loan (assuming this was a purchase transaction).

I'm sorry, no it is not a purchase, it is a refinance 80-10-10.

The answer would still be yes and it would be reportable as a refinance in that case.

Thank you for your assistance!

New question for this thread. If the first lien is for purchase and the second transaction closes simultaneously with the purpose of being a home improvement line of credit - does this make rescission apply because the funds are not being put toward the purchase?

Purchases (residential mortgage transactions) are excluded from rescission. Other purposes are not.

The line of credit is subject to rescission, even if it closes simultaneously. Give them the 3 day RTC notice.