I have reviewed past posts concerning rescission's but did not come across this specific question...so here goes.

If we are closing a new loan for Mrs. Doe, and the proceeds are to payoff an existing loan jointly held by Mr & Mrs. Doe, would rescission apply to the new loan?

The Doe's are divorcing and a new deed was processed.

Yes. Look to the Official Staff Commentary to 226.2(a)(24).

Supplement I, 226.2: Definitions and Rules of Construction (01/01/01)

2(a)(24) Residential mortgage transaction.

5. Acquisition. i. A residential mortgage transaction finances the acquisition of a consumer’s principal dwelling. The term does not include a transaction involving a consumer’s principal dwelling if the consumer had previously purchased and acquired some interest to the dwelling, even though the consumer had not acquired full legal title.

ii. Examples of new transactions involving a previously acquired dwelling include the financing of a balloon payment due under a land sale contract and an extension of credit made to a joint owner of property to buy out the other joint owner’s interest. In these instances, disclosures are not required under §226.18(q) or §226.19(a) (assumability policies and early disclosures for residential mortgage transactions). However, the rescission rules of §§226.15 and 226.23 do apply to these new transactions.