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#2284016 - 05/02/23 11:52 AM ROR on a purchase
Shakes Offline
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Joined: Jul 2022
Posts: 24
We have a residential loan where the borrower is buying a new primary residence and we are taking both the new home and the borrower's current primary residence as collateral. The loan will be secured by both. It is my understanding that we will need to provide a ROR. I have mostly worked in California where everything is done through the title company. I am new to Massachusetts where attorneys are involved. There seems to be confusion on how to accomplish the ROR with a purchase. Wouldn't we just prepare all the documents (note, mortgage, disclosures, etc.) and have them signed with enough time to satisfy the 3 day ROR period prior to the and then wait and execute/record them (assuming the borrower doesn't rescind) on the planned purchase date? Is there something more complicated about it that I am not aware of? I am getting push back and feel like I must be missing something.

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#2284018 - 05/02/23 12:10 PM Re: ROR on a purchase Shakes
John Burnett Offline
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John Burnett
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Cape Cod
If your attorney is confused, remember not to use them again. This is not a new scenario in the Bay State or anywhere else.

Yes, there is a RoR with regard to the mortgage on the current primary residence. Yes, you have a closing and hold the proceeds until the bank verifies the borrower has not rescinded during the rescission period. And in the Massachusetts banks I have worked in, the mortgages and deed for the new residence are typically held by the attorney and recorded once the rescission period is over and non-rescission has been verified.

Who is giving you pushback and what are they suggesting?
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#2284020 - 05/02/23 12:31 PM Re: ROR on a purchase Shakes
Shakes Offline
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Joined: Jul 2022
Posts: 24
I am not totally clear what the hesitancy is. I am in the process of trying to figure that out. I appreciate the reassurance that I am not off base here. Thank you!

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#2284024 - 05/02/23 01:49 PM Re: ROR on a purchase Shakes
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,362
Galveston, TX
Ask the attorney how not including a RofR is legal under Regulation Z (see below). He must not be much of a real estate attorney. Your title company probably deals with this all the time - ask them what the typical process is for funding if they are the settlement agent. If this attorney is acting as the settlement agent - find a new one quick.

Official Interpretation
23(a) Consumer's Right to Rescind
Paragraph 23(a)(1)

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.
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#2284032 - 05/02/23 02:47 PM Re: ROR on a purchase Shakes
John Burnett Offline
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John Burnett
Joined: Oct 2000
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Cape Cod
The one thing I know about the differences in practice between California and Massachusetts (I am sure there are many more differences), is that we don't use the term "escrow" for the process of getting all the paperwork from closing recorded and final transfers of funds completed. For us, "escrow" is the practice of accumulating installments of tax, insurance and assessments with the mortgage servicer and the payment of insurance premiums, taxes, etc. by the servicer when due.
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