Bridge Loan, Purchase Money & ROR

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Question:

If the proceeds of a bridge loan, collateralized by the existing home, is being used as purchase money to buy a new home, is rescission required?

Answer:

See the Official Staff Commentary to 226.23(a)(1)(4).

...any loan subject to Regulation Z and secured by the equity in the consumer's current principal dwelling (for example, a bridge loan) is subject to the right of rescission regardless of the purpose of that loan...

First published on BankersOnline.com 2/04/08