I am looking at a $400,000 HELOC (with $290,000 of the funds drawn) and the loan refinanced into a closed-end Home Equity loan for $350,000. I am wondering if this would require a Right of Rescission. Is this considered new monies based on the new loan amount is higher than amount drawn and owed? Or no new monies as the total line amount is higher than the new loan amount?

Any thoughts appreciated.

The extra $60,000 over the current principal balance makes the transaction rescindable.


(f) Exempt transactions. The right to rescind does not apply to the following:

(2) A refinancing or consolidation by the same creditor of an extension of credit already secured by the consumer's principal dwelling. The right of rescission shall apply, however, to the extent the new amount financed exceeds the unpaid principal balance, any earned unpaid finance charge on the existing debt, and amounts attributed solely to the costs of the refinancing or consolidation.

Thank you. That is what I thought but of course there is no RoR on this transaction. Another day in paradise.

I assume you meant to say, "of course there is no RoR notice" in the file for the transaction.