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Does RoR apply to a bridge loan?

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Question: 
Will the right of rescission apply on a 12-month bridge loan to purchase the borrowers secondary dwelling, using their primary dwelling as collateral also?
Answer: 

4. Special rule for principal dwelling. Notwithstanding the general rule that consumers may have only one principal dwelling, when the consumer is acquiring or constructing a new principal dwelling, 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. For example, if a consumer whose principal dwelling is currently A builds B, to be occupied by the consumer upon completion of construction, a construction loan to finance B and secured by A is subject to the right of rescission. A loan secured by both A and B is, likewise, rescindable.

First published on 10/29/2023

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