If a customer uses a HELOC to purchase a home and the bank finances the origination fee and flood fee, for example, would the fees that are financed be rescindable? The HELOC is secured by the home being purchased. Reg. Z states, "only the particular advance for the downpayment, i.e. purchase, would be exempt from the rescission right".
For example, loan amount is $250,000. $248,000 is sent to the title company for the purchase and $1000 is drawn from the line to finance the origination fee and flood fee. Since the entire loan amount is not being sent to title for the purchase is the $1000 rescindable?
Your help would be greatly appreciated. Thank you.