Right of Recission in Refinancing

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Question:

If we refinance a primary residence loan and add new money, but do not exceed the original amount of the deed of trust, is right of rescission required?

Answer:

The mortgage/DOT only secures the outstanding balance of the loan up to the maximum amount stated on the mortgage/DOT. If the mortgage/DOT secures up to a maximum of $200,000, you could not sue for the $200,000 if the balance is only $100,000, so your security interest is only $100,000. Any new money advanced above the $100,000 would be an increase in your security interest and subject to the ROR.

First published on BankersOnline.com 7/05/10