The Right of Rescission

The Truth in Lending Act’s right of rescission requirements always seem to generate a lot of questions.  Knowing when to give it, who to give it to and how to count the three-day rescission period can all be tricky.  Here are some questions we’ve received recently:

Question:  Are we required to give rescission for a HELOC secured by an investment property that’s not the borrower’s primary residence?

Answer:  No, the right of rescission only applies when a security interest is taken in a dwelling someone both owns and is their primary residence.

Question:  A mother and daughter own a home together.  The home is the mother’s primary residence and the daughter lives in another state.  Mom is getting a home equity loan in her name only.  Daughter does not get the right to rescind since the home isn’t her primary dwelling, but does she need to receive a copy of the Closing Disclosure?

Answer:  A non-borrower is only required to receive a copy of the Closing Disclosure if the individual has the right to rescind.

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