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Bridge Loans & Rescission

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Question: 
When using a mortgage on someone's current residence as a down payment for the purchase of a new home (bridge loan) do you need the 3 day right of rescission?
Answer: 

Yes.

Section 226.23 Right of rescission.
4. Special rule for principal dwelling. When the consumer is acquiring or constructing a new principal dwelling, any loan secured by the equity in the consumer’s current principal dwelling (for example, a bridge loan) is still subject to the right of rescission regardless of the purpose of that loan.

First published on BankersOnline.com 10/21/02

First published on 10/21/2002

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