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Home Equity Loan, Primary Residence, and ROR

Answered by: 
Richard Insley

Question: 
Mr. Smith bought a house on 4/28/03 as his primary residence; however, he is not moving into the house until 7/1/03. Mr. Smith is taking a home equity line of credit out on the new house before he moves in. Does the right of rescission apply to the home equity loan?
Answer: 

Although the rule does not address this situation squarely, I would consider the equity line to be rescindable. If this question arose prior to consummation of the equity line, I would follow the rescission procedures. On the other hand, if it arose during a review of a past transaction, there's nothing you can do to change what has already failed to happen, so no further action would be productive.

First published on BankersOnline.com 7/21/03

First published on 07/21/2003

Filed under: 
Compliance
Filed under compliance as: 
Home Equity
IT
Right of Rescission

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