Notice Of Right To Cancel - Not Required?

You are correct that the RofR does not apply to purchases unless you are taking a security interest in the borrower's current dwelling (a bridge loan), and non-consumer loans. There are other instances in which the RofR doesn't apply either.

Here's an excerpt from our Advanced Lending Manual concerning the Right of Rescission:

Right of Rescission: [Section 226.23 - page 6666.03]

1. In a credit transaction in which a security interest is or will be retained or acquired in a consumer’s principal dwelling, each consumer whose ownership interest is or will be subject to the security interest shall have the right to rescind the transaction. The creditor must deliver two copies of the notice of the right to rescind to each consumer who is entitled to rescind.
2. The right of rescission does not apply to:
   
   a) A refinancing or consolidation by the same creditor already secured by the consumer’s principal dwelling. CLOSED END LOANS ONLY. [Section 226.23(f)(2)-page 6666.05]
   
   i) The right of rescission shall apply, however, to the extent the new loan amount exceeds the old loan payoff (principle and interest) and closing costs.
   
   ii) New money includes loans refinanced by the same bank t
   
   hat were not previously secured by the borrowers home. [Commentary to Section 226.23 (a)(1) #5 - page 6960.01]iii) Open end loans (Home Equity Lines of Credit) always require a right of rescission. There is no exception for a refinancing even if there is no new money.
   
   b) Purchase or construction loans and construction loans when converted to permanent financing.[Commentary to Section 226.23(f) #1 - page 6964 and Commentary to Section 226.2(a)(24) #4 - page 6882]
   
   c) Non consumer purpose loans. If Truth in Lending does not apply neither does the Right of Rescission.
   
   First published on BankersOnline.com 4/03/06