Good afternoon,

We completed a HELOC for a home that is owned by a grandson and grandmother. The grandson was approved for the HELOC on his own and listed the residence as his secondary home. Due to the fact that it was a secondary home to the borrower, no rescissions were signed. However, the home is a primary residence to the grandmother. Should a right of rescission been given to the grandmother, as her primary residence, even though she is not a borrower on the loan? I appreciate any guidance.

1026.15

(a) Consumer's right to rescind. (1)(i) Except as provided in paragraph (a)(1)(ii) of this section, in a credit plan in which a security interest is or will be retained or acquired in a consumer's principal dwelling, each consumer whose ownership interest is or will be subject to the security interest shall have the right to rescind: each credit extension made under the plan; the plan when the plan is opened; a security interest when added or increased to secure an existing plan; and the increase when a credit limit on the plan is increased.

(ii) As provided in section 125(e) of the Act, the consumer does not have the right to rescind each credit extension made under the plan if such extension is made in accordance with a previously established credit limit for the plan.

Definitions
(11) Consumer means a cardholder or natural person to whom consumer credit is offered or extended. However, for purposes of rescission under §§ 1026.15 and 1026.23, the term also includes a natural person in whose principal dwelling a security interest is or will be retained or acquired, if that person’s ownership interest in the dwelling is or will be subject to the security interest. For purposes of §§ 1026.20(c) through (e), 1026.36(c), 1026.39, and 1026.41, the term includes a confirmed successor in interest.

Thank you Rocky. I did read the definition of consumer but wanted to make sure I was interpreting it correctly. I believe I am and the grandmother should have had the right to rescind based on the definition of consumer. I appreciate you reinforcing my thoughts.

Yes - the grandmother was entitled to a RofR.