Purchase Money Loan, HELOC, or Both

Answered by:

Question:

A customer has requested Home Equity Line of Credit to be used partially as purchase money for new home. We would have 1st lien as remainder of purchase will be from customer cash. Do we treat this as a "Purchase Money Mortgage" with all appropriate RESPA and TIL disclosures, or will it qualify as HELOC with appropriate disclosures? The loan will not be closed until current home is sold, therefore, no bridge loan.

Answer:

This is a purchase money loan with no right of rescission. However, it is also a HELOC which means that giving correct and complete Reg Z HELOC disclosures completes your responsibilities. There is no need for additional RESPA disclosures.

First published on BankersOnline.com 04/21/03