Posted By: Likes to Comply
HELOC Renewal Before Maturity-ROR? - 01/31/18 07:39 PM
In reviewing multiple posts about HELOCs and Right of Rescission there seems to be differing statements about whether ROR applies when a HELOC is renewed before maturity by way of a true renewal agreement.
1026.15 - Right of Rescission
Applies:
• In a credit plan in which a security interest is or will be retained or acquired in a consumer's principal dwelling, each consumer whose ownership interest is or will be subject to the security interest shall have the right to rescind:
o each credit extension made under the plan;
 unless made in accordance with a previously established credit limit for the plan
o the plan when the plan is opened;
o a security interest when added or increased to secure an existing plan; and
o the increase when a credit limit on the plan is increased.
Exempt transactions:
• Residential mortgage transaction. Is a rare scenario; but could be if plan was for the downpayment for the purchase of a dwelling. Then only the portion for the downpayment would be exempt from the rescission right.
1026.40 - Home Equity Lines of Credit Disclosures
Applies:
• All open end credit plans secured by the consumer’s dwelling and is not limited to plans secured by the consumer’s principal dwelling and is for consumer purposes.
• Changes to home equity plans entered into on or after November 7, 1989
o The change in terms rules at 1026.9(c) applies if, by written agreement under 1026.40(f)(3)(iii) (may make a specified change if the consumer specifically agrees to it in writing at that time) a creditor changes the terms of a home equity plan – entered into on or after November 7, 1989—at or before its scheduled expiration, for example, by renewing a plan on different terms.
o A new plan results, however, if the plan is renewed (with or without changes to the terms) after the scheduled expiration. The new plan is subject to all open-end credit rules, including §§1026.6, 1026.15 (rescission), and 1026.40.
So does ROR apply even if it is a true renewal (not refinancing) and there is no new money? Or only when being renewed (we can renew after maturity in this state) after the maturity of the existing plan?
1026.15 - Right of Rescission
Applies:
• In a credit plan in which a security interest is or will be retained or acquired in a consumer's principal dwelling, each consumer whose ownership interest is or will be subject to the security interest shall have the right to rescind:
o each credit extension made under the plan;
 unless made in accordance with a previously established credit limit for the plan
o the plan when the plan is opened;
o a security interest when added or increased to secure an existing plan; and
o the increase when a credit limit on the plan is increased.
Exempt transactions:
• Residential mortgage transaction. Is a rare scenario; but could be if plan was for the downpayment for the purchase of a dwelling. Then only the portion for the downpayment would be exempt from the rescission right.
1026.40 - Home Equity Lines of Credit Disclosures
Applies:
• All open end credit plans secured by the consumer’s dwelling and is not limited to plans secured by the consumer’s principal dwelling and is for consumer purposes.
• Changes to home equity plans entered into on or after November 7, 1989
o The change in terms rules at 1026.9(c) applies if, by written agreement under 1026.40(f)(3)(iii) (may make a specified change if the consumer specifically agrees to it in writing at that time) a creditor changes the terms of a home equity plan – entered into on or after November 7, 1989—at or before its scheduled expiration, for example, by renewing a plan on different terms.
o A new plan results, however, if the plan is renewed (with or without changes to the terms) after the scheduled expiration. The new plan is subject to all open-end credit rules, including §§1026.6, 1026.15 (rescission), and 1026.40.
So does ROR apply even if it is a true renewal (not refinancing) and there is no new money? Or only when being renewed (we can renew after maturity in this state) after the maturity of the existing plan?