We have a borrower needing to refinance. The borrower is currently separated from his wife. He lives in the house, she has moved out. We will be taking security interest in his principal dwelling - the home they both had lived in. They both still have ownership rights. The divorce is not settled yet.

The right of recission will be provided to the borrower, but am I correct in that we don't have to give her ROR because this is not her principal dwelling, even though she still has ownership interest?

IMHO - In a situation like this, I would provide her the right of rescission regardless of what either party claims regarding residency. If this divorce turns ugly, you want to cover all your bases. She is going to have to sign the deed anyway, so why not just get it done? Technically, you are correct, but why open that door.

Potential for ugliness looms huge here especially if he's NOT borrowing to buy her out. Is there a seperation agreement giving him the right to put a mortgage on the property? If not, you need to make sure she knows what's happening and gets the right to stop it.

Randy's right. Give her the ROR and make sure it's handled properly. You don't want this blowing up in your face later.

Nothing can can get uglier than a nasty divorce. Overcompliance is normally a bad idea--but this is the exception!