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#398258 - 08/08/05 06:48 PM Rescission
Millie Offline
Junior Member
Joined: Apr 2003
Posts: 44
North Carolina
When isn't a ROR needed on a second lien loan? We have the following situation: principal dwelling, $125K home equity line, subordinate lien, new loan customer at our bank. The borrower states that ROR does not apply in second lien loans. This is not a refinance. I am insisting that a ROR applies per Reg Z but they are stating that it's not applicable per state law?

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Lending Compliance
#398259 - 08/08/05 06:53 PM Re: Rescission
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,532
Bloomington, IN
Quote:

When isn't a ROR needed on a second lien loan?



1. Business purpose credit.
2. Not the borrower's primary residence.
3. No cash out refinance.
4. It's part of a RMT.

Those are the only four that comes to mind at this time.

Unless your state is exempt from Reg. Z or your state requirement is more stringent, Reg. Z will prevail.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#398260 - 08/08/05 06:55 PM Re: Rescission
upstateNY Offline
Platinum Poster
Joined: Apr 2003
Posts: 933
New York State
When you take a non-purchase money security interest in a person's primary dwelling, the right of rescission applies.

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#398261 - 08/08/05 06:57 PM Re: Rescission
Anonymous
Unregistered

Why would a state loan contradict a federal law? Wouldn't federal law prevail?

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#398262 - 08/08/05 07:13 PM Re: Rescission
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,532
Bloomington, IN
Unless your state is exempt from Reg. Z or your state requirement is more stringent, Reg. Z will prevail.


Unless your state is exempt from Reg. Z - some states have their own version of TIL and are "excused" from Reg. Z.

state requirement is more stringent - if state law is more stringent than Federal Law - state law will prevail - unless you operate under the preemption rules.

Reg. Z will prevail - if neither of the above applies then Reg. Z prevails.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#398263 - 08/08/05 07:33 PM Re: Rescission
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Millie: You have received some excellent advise in this string. I also want to add the following:

You stated that this was a line of credit. The exemption for "no cash out refinance" is not included in the open-end rules {ยง226.15]. IOW, if you have a HELOC that is refinanced, you ALWAYS provide a RofR.
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David Dickinson
http://www.bankerscompliance.com

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#398264 - 08/08/05 07:52 PM Re: Rescission
complianceman Offline
Platinum Poster
complianceman
Joined: Mar 2005
Posts: 687
New Albany, IN
The only state that I am aware of that has exempted itself from various section of TILA is Massachusetts.
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#398265 - 08/08/05 09:04 PM Re: Rescission
Anonymous
Unregistered

Quote:

Quote:

When isn't a ROR needed on a second lien loan?



1. Business purpose credit.
2. Not the borrower's primary residence.
3. No cash out refinance.
4. It's part of a RMT.

Those are the only four that comes to mind at this time.

Unless your state is exempt from Reg. Z or your state requirement is more stringent, Reg. Z will prevail.



Should #3 read, "No cash out refinance, same creditor."?

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#398266 - 08/08/05 09:21 PM Re: Rescission
SLU Voice Offline
Gold Star
SLU Voice
Joined: Apr 2004
Posts: 288
Hammond, LA




Should #3 read, "No cash out refinance, same creditor."?



This was me, sorry, I wasn't logged in.

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#398267 - 08/08/05 09:22 PM Re: Rescission
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,532
Bloomington, IN
Yep, I was just thinking off the top of my head.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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