Reg Z and the Right of Rescission

Answered by:

Question:

Does the Right of Rescission apply to a lease purchase? Reg Z specifically eliminates all "purchases", and ownership is not transferred until the actual purchace has been made.

Answer:

In what respect, the initial lease purchase or the refinancing of the lease purchase? If the refinancing, then review the Commentary to 226.2(a)(24); if it is a residential mortgage transaction, refer to subsection (5)(ii). "Reg Z specifically eliminates all purchases", is a false statement. Reg Z exempts residential mortgage transactions which is defined at 226.2(a)(24). Not all purchase transactions are residential mortgage transactions.

First published on BankersOnline.com 9/13/10