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!

yes. Best I can tell you is that there is no exception under section 23.

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.

Thank you for your time and help, very appreciated!

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.

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.

We do, occasionally, but only with ROR

If we are deferring payments, but extending maturity, is ROR required? I'm thinking no, since there will be no new money.

Thanks!

No new money = no RofR.

Thanks rlcarey!