HELOC with the purpose to purchase new primary residence; collateral is new residence and current residence. (Current residence up for sale).
Does ROR apply to this transaction since their current residence is taken as collateral? Regulatory cite the commentary for 1026.15(a)(1)(6)?
6. 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, a credit plan or extension that is subject to Regulation Z and is secured by the equity in the consumer's current principal dwelling is subject to the right of rescission regardless of the purpose of that loan (for example, an advance to be used as a bridge 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 loan to finance B and secured by A is subject to the right of rescission. Moreover, a loan secured by both A and B is, likewise, rescindable.
Just want to make sure I understand this correctly.
Thank you!
Last edited by mnbanker09; 05/24/21 11:16 PM.