ROR - Contract for Deed Payoff

Posted By: mnbanker09

ROR - Contract for Deed Payoff - 03/17/21 05:34 PM

A customer that applies for a loan to payoff their contract for deed and purchase the property. Does Right of Rescission apply?
We have a difference of opinion here, and whether this transaction would be a purchase or refi. Thanks in advance!
Posted By: rlcarey

Re: ROR - Contract for Deed Payoff - 03/17/21 05:41 PM

It comes down to whether or not the transaction is a RMT:

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.