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Loan Rescindable if No Transfer of Title?

Answered by: 
Randy Carey

Question: 
A borrower already owns his land. We give a construction loan and in a second transaction, we payoff construction loan with permanent financing. Is this loan rescindable due to the borrower already owing land and no transfer of title takes place?
Answer: 

It is not rescindable. See the definition of a residential mortgage transaction in 1026.2(a)(24) and commentary:4. Construction financing. If a transaction meets the definition of a residential mortgage transaction and the creditor chooses to disclose it as several transactions under 1026.17(c)(6), each one is considered to be a residential mortgage transaction, even if different creditors are involved.First published on BankersOnline.com 4/15/13

First published on 04/15/2013

Filed under: 
Compliance
Filed under compliance as: 
IT

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