Right Of Rescission & Bridge Loans

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Question:

Is a Right of Rescission required on a bridge loan for 12 months using their current primary residence as collateral. Purpose of the loan is to purchase a new primary residence.

Answer:

Yes.

Section 226.23 Right of rescission.
When the consumer is acquiring or constructing a new principal dwelling, any loan secured by the equity in the consumer’s current principal dwelling (for example, a bridge loan) is still subject to the right of rescission regardless of the purpose of that loan.

First published on BankersOnline.com 11/04/02