Rescission and Mobile Home Lot

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Question:

I have a compliance question regarding right of rescission. If a person's primary residence is a piece of land with a mobile home on that piece of land and the person applies for a loan using the land only as collateral, is a rescission period still required? I would think it would be since the property is that person's primary residence, even though the mobile home is not being used as collateral.

Answer:

The right of rescission applies when you take or add a security interest to the consumer's principal dwelling. A piece of land does not meet the definition of a dwelling.

If you are not taking a security interest in the mobile home, the right of rescission would not apply. However, when it comes to mobile homes located on real property owned by the consumer, it is always a good idea to check your state law to make sure the mobile home is not considered real property and that your state does not have any specific rules affecting the right of rescission.

First published on BankersOnline.com 2/21/05