ROR on a Construction Loan

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Question:

Does right of recission apply in rolling a construction loan on a personal residence to permanent financing, no new funds, no new note? I say no. But, if we are advancing additional funds, still under the same note, does ROR apply?

Answer:

No. A loan being rolled from construction to permanent is a "residential mortgage transaction" (RMT). RMT's are not subject to the RofR rules. See the Commentary to Section 226.2(a)(24) #4.

First published on BankersOnline.com 12/1/03