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No ROR Needed on Loan Renewal?

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We originated a loan to a couple and their son to buy unimproved land. We took the couple's owner occupied residence and the land as collateral. We provided a right of rescission to the couple. The loan has matured and we are in the process of renewing it and find out that the son has moved a mobile home onto the unimproved land which is his primary residence. We are not advancing any new money with the renewal. Are we correct in thinking that we do not need to provide the right of rescission to the son since it became his primary residence after the loan was funded?

If you are taking a security interest in the mobile home, where you had none before, then the ROR would apply to the security interest being taken in the mobile home. If you are not taking a security interest in the mobile home and only retaining a security interest in the original residence then ROR would not apply if no new money is being advanced.

First published on 7/09/07

First published on 07/09/2007

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