Does ROR Apply To Each CoOwner?

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Question:

I need clarification on a age old rescission question. Wife is borrower on loan, she lives in home, ownership is in both the wife's and husband's names. Husband does not live in the residence (he has his own principal residence). Husband is not on the note, however he did sign the security agreement. Would the husband have the right to rescind? I am a little confused because I have seen a Reg Z article that states "Each person with an ownership interest has the right to rescind even if all the owners don't live in the house."

Answer:

This is a noted difference between TILA, the law, and Reg. Z which implements it. The former doesn't specify ownership interest. The latter does and is generally what is followed by regulators. It could be to your advantage to consult counsel and case law on the issue if you feel you have risks apart from the examiners.

Comment 2(a)(11)2 For purposes of rescission under Section Section 226.15 and 226.23, a consumer includes any natural person whose ownership interest in his or her principal dwelling is subject to the risk of loss."

This isn't the husbands principal dwelling.

First published on BankersOnline.com 08/18/03