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ROR on Refinance

Answered by: 
Randy Carey

Question: 
A rescindable loan for $20,000 was made and the ROR notice was provided. This loan is paid down to $10,000 and then the borrower refinances the $10,000 and wants an additional $5,000 for a total of a $15,000 loan. Is a ROR notice required for the $15,000 loan even though it is less than the original $20,000?
Answer: 

The requirement to provide the right of rescission does apply in this case. However, the rescission only applies to the amount over the existing obligation, so, like any rescission situation, you would put the borrower back to the point just prior to the transaction that was being recinded which, in this case, is they still owe you the $10,000 that they were attempting to refinance.

First published on BankersOnline.com 2/12/07

First published on 02/12/2007

Filed under: 
Compliance
Filed under compliance as: 
IT
Right of Rescission

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