I'm questioning if the below examples need a ROR. I would appreciate some advice.

1. We have a loan to purchase a house and add improvements. Home will be the applicant's primary dwelling. The loan term is an 11 month interim loan. Is the ROR applicable?
2.Refinance of primary dwelling from same lender with additional monies for home improvement?--
3.Refinance from same lender with no additional monies?

I thinking that #2 is applicable with regards to the additional proceeds and #3 is not applicable; however it's #1 that really has me stumped. Thanks.

1. No - if the funds are used to purchase the home, right of rescission is not applicable.
2. Yes
3. No

Regarding #1, part of the funds are used to purchase the home; however, an addional amount of funds is for improvements---is the answer still the same No? I was under the impression that part of the proceeds used for the improvement were applicable to the ROR? Thanks.

The answer would still be no as long as it was treated as one transaction. If treated as separate transactions (2 loans) then only the transaction whose proceeds are used for the RMT would be exempt. See the OSC to 226.23(f)(3).

Look at OSC 6 to 226.2(a)(24) (definition of "residential mortgage transaction," which is excluded from ROR: "Multiple purpose transactions. A transaction meets the definition of this section if any part of the loan proceeds will be used to finance the acquisition or initial construction of the consumer's principal dewlling."

The loan is a draw note with multiple advances. The first advance was to purchase the house, subsequent advances are for the improvements to be made. I'm not sure I understand what is meant by more than one transaction--is this implying that all the monies were not advanced up front? There was only one closing. By reading the below 226.23 it appears the funds for the home improvement are subject to the ROR because there are subsequent advances for the improvements:

3. Combined-purpose transaction. A loan to acquire a principal dwelling and make improvements to that dwelling is exempt if treated as one transaction. If, on the other hand, the loan for the acquisition of the principal dwelling and the subsequent advances for improvements are treated as more than one transaction, then only the transaction that finances the acquisition of that dwelling is exempt.

Thanks for all the input on this issue.