I have an unusual situation I need some help with. Non-revolving consumer line, home improvement,that was refinanced and the line increased; secured by principal residence; customer needed money before rescission period ended; lender refianced the loan as unsecured with the intention of doing a loan modification and deed modification to add dwelling to loan; should a rescission still have been completed when modification was done? I have in the file the HOEPA worksheet dated the date of the application also. I hope I have not made this confusing. Thanks for the help.

Gotta love those creative loan officers, eh? My read on Reg Z is that, despite the loan officer's efforts to circumvent the ROR, it still applies in this case. Most certainly on the amount of the increase.

Anytime a security interest is taken or increased in the consumer's principal residence the ROR applies. A modification adding the security interest to an existing obligation does not exempt the ROR.

Quote:

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lender refinanced the loan as unsecured with the intention of doing a loan modification and deed modification to add dwelling to loan;

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Can you say circumventing the rescission rule?

I don't have a link but you may want to try to find a March 6 2001 complaint filed against Associates by the FTC.

The following is from a workbook received at a seminar in 2002.

Providing borrowers with "Homeowner's Express Loans," which were offered pending the closing of a home equity loan. The Homeowner's Express Loan and the subsequent home equity loan were, in reality, one transaction that Associates "spit" into two so as to provide consumers with immediate cash. (A violation of the three-day rescission rule).