Owner that Signs Mortgage and not the Note

Question:

We have an owner who will not be signing the note and just the mortgage. Should they sign the TIL along with the Right of Rescission?

Answer:

They should not sign the TIL. If the home is also their primary dwelling, they should get the Right of Rescission.

In our Lending Desk Top Reference Manual, we address this issue:
3rd Party Releases:
If the 3rd party lives in the house and has an ownership in the house, the 3rd party must receive all disclosures (prepared for the borrowers) and a rescission notice.

Banker’s Compliance Consulting suggests that the bank prepare a letter that may be signed by the 3rd party that attests to the fact that the 3rd party received a copy of the note, Truth in Lending disclosure, Right of Rescission notice, HUD-1 settlement statement and HOEPA disclosure if applicable.

You can find the Desk Top Reference Manual in the BOL Store.

First published on BankersOnline.com 7/25/11