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Rescission and Home Equity Lines

Answered by: 
David A. Dickinson

Question: 
If the HELOC is closed simultaneously with the purchase money mortgage and the HELOC is fully funded at that time, my understanding is that it would not be subject to rescission. However, if a payment is paid on the line and later another advance is taken, is that next advance rescindable? Can the notice be given to the borrower at closing for future advances? Should specific language be in the disclosure noting that rescission does not relate to the initial advance?
Answer: 

You are correct that the initial advance is not subject to the RofR and that future advances require a RofR. Provide the RofR notice at closing to cover all future advances. This has been discussed numerous times on BOL. You can find much more information by searching for this topic.

First published on BankersOnline.com 1/17/05

First published on 01/17/2005

Filed under: 
Lending
Filed under lending as: 
HELOC
Home Equity

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