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#2201511 - 12/27/18 04:28 PM Right of Rescission
gms2013 Offline
Joined: May 2013
Posts: 76
I may be overthinking this but, this is the situation. If you have a loan that is to purchase a residence ROR doesn't apply unless it is a Bridge loan.
We have a loan to purchase a primary residence for a young couple. The downpayment will be a 2nd lien on the parents residence which will also be securing the purchase loan. Would ROR apply to this loan?

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Lending Compliance
#2201513 - 12/27/18 04:34 PM Re: Right of Rescission gms2013
rlcarey Offline
10K Club
Joined: Jul 2001
Posts: 79,618
Galveston, TX
The loan secured by the parent's house - yes.
The opinions expressed here should not be construed to be those of my employer:

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#2201562 - 12/27/18 07:58 PM Re: Right of Rescission gms2013
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I agree. Here's the Commentary to ยง1026.23(a) to support this:

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.
David Dickinson

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