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3 Day ROR Required if Not Homestead but Purchase?

Answered by: 
Randy Carey
Dan Persfull

Question: 
I have customers purchasing a new home, which needs some work. We are doing a purchase money loan for homestead, with builders & mechanics lien contract for adding a kitchen to this house. The title company is requiring a 3 day ROR. I say one is not necessary since this is a purchase. Title company says since we are advancing funds for improvements, a 3 day ROR is required. It is not currently their homestead, they are buying it.
Answer: 

Answer by Dan Persfull: Multi-purpose Residential Mortgage Transactions, if treated as one transaction, are not subject to rescission. See the Commentary to 1026.2(a)(24)(6) and 1026.23(f)(3).

Answer: 

Answer by Randy Carey: Dan is correct, But the question may also be related to State law, as in some states, home improvement contracts have their own rules for rescission. They might want to check with their legal counsel.

First published on BankersOnline.com 6/3/13

First published on 06/03/2013

Filed under: 
Lending
Filed under lending as: 
Home Improvement
Lien

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