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#2214017 - 05/20/19 05:57 PM Modification and Right of Recission
Not a Fan Offline
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Tennessee
Have a potential Loan Modification that is going to be done. The borrower will receive additional monies above their original contract amount. Is a Right of Recession required? And could you point me to a source? Thanks You!

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#2214035 - 05/20/19 08:02 PM Re: Modification and Right of Recission Not a Fan
RR Joker Offline
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yes. Best I can tell you is that there is no exception under section 23.
Last edited by RR Joker; 05/20/19 08:02 PM.
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#2214039 - 05/20/19 08:22 PM Re: Modification and Right of Recission Not a Fan
Dan Persfull Offline
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If the current balance is $100,000 and if you are increasing that to $125,000 then you are adding an additional $25,000 security interest in the property. The additional security interest is subject to rescission.

Addition of a security interest. Under §1026.23(a), the addition of a security interest in a consumer's principal dwelling to an existing obligation is rescindable even if the existing obligation is not satisfied and replaced by a new obligation, and even if the existing obligation was previously exempt under §1026.3(b). The right of rescission applies only to the added security interest, however, and not to the original obligation. In those situations, only the §1026.23(b) notice need be delivered, not new material disclosures; the rescission period will begin to run from the delivery of the notice.
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#2214064 - 05/21/19 11:41 AM Re: Modification and Right of Recission Not a Fan
Not a Fan Offline
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Thank you for your time and help, very appreciated!

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#2214087 - 05/21/19 05:01 PM Re: Modification and Right of Recission Not a Fan
Richard Insley Offline
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Toano, VA
The ROR trigger for closed-end credit (Section 1026.23(a)) is pretty clear. The trigger for new transaction disclosures (Section 1026.20(a)) is not as clear...but as Dan explains, these two rules can be mutually exclusive when you are renewing, modifying, altering, refinancing, etc. an existing closed-end credit.
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#2214374 - 05/24/19 07:33 PM Re: Modification and Right of Recission Not a Fan
OnTheEdge Offline
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SmallTown, USA
Just a point to ponder...We don't allow increase of funds for modifications. We would require a new loan (refinance) with all new disclosures including ROR.
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#2214376 - 05/24/19 07:34 PM Re: Modification and Right of Recission Not a Fan
RR Joker Offline
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The Swamp
We do, occasionally, but only with ROR smile
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#2235781 - 04/27/20 10:57 PM Re: Modification and Right of Recission Not a Fan
Mel in WA Offline
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If we are deferring payments, but extending maturity, is ROR required? I'm thinking no, since there will be no new money.

Thanks!

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#2235783 - 04/27/20 11:09 PM Re: Modification and Right of Recission Not a Fan
rlcarey Online
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Galveston, TX
No new money = no RofR.
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#2235786 - 04/27/20 11:44 PM Re: Modification and Right of Recission Not a Fan
Mel in WA Offline
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Thanks rlcarey! smile

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