Question:
When closing a new loan using the existing residence as collateral to purchase additional acreage, the right of rescission applies. When do you have the sellers sign their documents, since we will only have one loan, but it has the new property as collateral as well? The same day as borrowers' initial signing, or when the loan comes out of rescission? The concern I have is that if the customers sign a mortgage on a property they do not own, what happens if the seller decides not to sell when we are in the rescission period? Other instititutions have waited until it is out of rescission, and then have the seller sign a separate HUD along with the borrowers, showing the date it came out of rescission. Our compliance officer states the seller must sign the same day as the initial docs are signed.