The new loan amount will increase and the borrowers currently occupy an outbuilding that is situated on the subject property address. Does ROR apply?
If that outbuilding is also securing the new loan then rescission will apply.
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.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.