Refinance and ROR

Posted By: Patricia

Refinance and ROR - 06/04/20 08:00 PM

Applicant has been buying primary resident on contract and now wants to payoff the contract and obtain a loan with the bank. For TRID purposes would this be a refinance?
Posted By: rlcarey

Re: Refinance and ROR - 06/04/20 08:17 PM

Technically, it most likely would be Home Equity.

1026.37(a)(9)(ii) Refinance. If the credit is not for the purpose described in paragraph (a)(9)(i) of this section, and if the credit will be used to refinance an existing obligation, as defined in § 1026.20(a) (but without regard to whether the creditor is the original creditor or a holder or servicer of the original obligation), that is secured by the property identified in paragraph (a)(6) of this section, the creditor shall disclose that the loan is for a “Refinance.”

1026.20(a) Refinancings. A refinancing occurs when an existing obligation that was subject to this subpart is satisfied and replaced by a new obligation undertaken by the same consumer.

Most land sales contract are not subject to Subpart C of Regulation Z.
Posted By: Patricia

Re: Refinance and ROR - 06/04/20 08:19 PM

Thank you.
Posted By: Dan Persfull

Re: Refinance and ROR - 06/04/20 09:04 PM

Since ROR is in the title you will want to look at the following in 1026.2.

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 §1026.18(q) (assumability policies). However, the rescission rules of §§1026.15 and 1026.23 do apply to these new transactions.