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Re: Right of Rescission

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#2709
JGo9
Participant

Kim,

Right of Rescission applies to a transaction subject to Reg Z in which a security interest is or will be retained in a consumer’s principal dwelling.

Dwelling means a residential structure that contains 1-4 units, whether or not the structure is attached to real property (mobile homes). The term also includes an individual condo unit, cooperative unit, mobile home, and trailer, if it is used as a residence. A consumer can only have one principal dwelling at a time. A vacation or second home is NOT a principal dwelling.

Right of Rescission doesn’t apply to purchase loans, business loans, transaction where a state agency is a creditor, or refinancing by the original creditor of an extension of credit that is already secured by the consumer’s principal dwelling, so long as NO NEW FUNDS are extended. Any new funds would be rescindable.

If the loan secured by the consumer’s principal dwelling is refinanced with a different lender; then rescission does apply. If the loan (secured by the consumer’s principal dwelling) is a is for home improvement or other consumer purpose then rescission applies. – Assuming none of the above exemptions apply.