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Reply To: Rescindable transaction opinion

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#12005

rcooper
Keymaster

The confusion come in because the regulation does not match the language of the law. TILA says: Except as otherwise provided in this section, in the case of any consumer credit transaction (including opening or increasing the credit limit for an open end credit plan) in which a security interest, including any such interest arising by operation of law, is or will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is extended, the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required under this section together with a statement containing the material disclosures required under this subchapter, whichever is later, by notifying the creditor, in accordance with regulations of the Bureau, of his intention to do so. TILA – Right of Rescission

You can see that this differs from the language you included from the regulation because it does not specify it must be an owner of the property. Jack has always advocated the safe approach is to follow the law as it provides protection to more consumers and would save you some trouble if a court decides the regulation doesn’t accurately interpret the law. On the flip side, following the regulation probably won’t get you into trouble with your examiner since most will be looking to the regulation to evaluate your processes.