Posted by LynnNC on 12/1/07 4:23pm
Msg #223896

When the Rescission Right Applies

I just took the NNA NSA recertification course and test. Included was the following regarding when the rescission right does not apply. I have posted this because I feel that it might be helpful to newbies. One of them was new to me: that the recission right does not apply to piggyback loans. I have never had a piggyback for an owner-occupied property without the RTC forms. I have also never had an instance when the borrower refinanced with the same lender where there was no RTC. I am aware that a lender can offer the RTC when not required to do so.

A mortgage loan has no right of rescission in the following circumstances:
• When the loan is used to buy a house (known as a “purchase” transaction).
• For refinance loans with the same lender.
• When the home is not a primary residence (e.g., vacation home or investment property).
• When the money borrowed is used for a private business.
• When the lender is a state agency.
• For “piggyback loans” — taking out a first and second mortgage loan — intended to avoid incurring private mortgage insurance.
• For “cash-out” refinance loans with the same lender, only the cash-out portion can be rescinded.

Reply by Shannon_Va on 12/1/07 4:51pm
Msg #223903

I find it very interesting that you say same lender refi's do not have a rescission period. Here in Va, all of the closings my title company does that are same lender refi's all give them a 3 day RTC. There was even one file we did, 2 weeks ago actually, where the borrower asked if he could waive his RTC on a same lender refi because he wanted funds sooner that later, and the lender denied his request.

Reply by LynnNC on 12/1/07 5:21pm
Msg #223907

It isn't what "I" say; I copied the list from the NNA NSA recertification course.

Reply by Shannon_Va on 12/8/07 4:05pm
Msg #225075

Yes, I wasn't trying to start anything, I was simply telling my experience.

Reply by Linda_H/FL on 12/1/07 5:15pm
Msg #223905

All of my signings for principal dwelling refi's (same lender, piggyback, etc) have had RTC's - here's the wording from RegZ

(f) Exempt transactions. The right to rescind does not apply to the following:
(1) A residential mortgage transaction.
(2) A refinancing or consolidation by the same creditor of an extension of credit already secured by the consumer's principal dwelling. The right of rescission shall apply, however, to the extent the new amount financed exceeds the unpaid principal balance, any earned unpaid finance charge on the existing debt, and amounts attributed solely to the costs of the refinancing or consolidation.
(3) A transaction in which a state agency is a creditor.
(4) An advance, other than an initial advance, in a series of advances or in a series of single-payment obligations that is treated as a single transaction under § 226.17(c)(6), if the notice required by paragraph (b) of this section and all material disclosures have been given to the consumer.
(5) A renewal of optional insurance premiums that is not considered a refinancing under § 226.20(a)(5).

Don't see anything about piggybacks in there...would be interested in where they got that information.

Reply by LynnNC on 12/1/07 5:24pm
Msg #223908

I am familiar with the wording from RegZ and also wondered where they got the information regarding piggybacks. I will send an email asking them. As we know, they are not always correct in their information.

Reply by CaliNotary on 12/1/07 7:56pm
Msg #223928

"As we know, they are not always correct in their information."

And yet you still posted it on here as fact, to be "helpful".

Reply by LKT/CA on 12/1/07 5:43pm
Msg #223912

NNA is wrong on the 2nd to last situation. I did exactly that, refi piggyback to avoid pmi and definitely had an RTC.

I would question some of the others, particularly "when the money is borrowed and used for private business". When equity is converted to cash I have NEVER had a lender ask or even care what I do with the money. The only two instances I know of where there's no RTC are a purchase and non-owner occupied property.

Reply by JanetK_CA on 12/1/07 6:01pm
Msg #223913

Not to defend the NNA info by any means, but just because it hasn't been your experience doesn't mean it is always the case. As someone else said, lenders may extend a rescission period even though it isn't required. As for what people do with the proceeds, some lenders don't want to extend credit if it is to be used for business purposes vs. personal expenses.

I think they certainly oversimplified the refinance statement in the 2nd item. Re: piggybacks, could it be that was what was referenced in § 226.17(c)(6)? I've gotta run, or I'd check. Tks.

Reply by Ernest__CT on 12/1/07 6:10pm
Msg #223914

Do not ever trust the NNA to be THE authority.

Several of their Certification exam questions are just plain _wrong_. Others are California-centric.

NEVER TRUST THE NNA!

Reply by MichiganAl on 12/2/07 1:06am
Msg #223940

Sounds incomplete at best.

Without researching or going back to read reg. Z tonight, my recollection is that a refi with the same lender has to be for the same amount or less than the original loan with no cash out. Regarding the piggyback loan, if it's true, my guess would be that since the first loan has an rtc, if you cancel the first loan, you cancel the entire transaction. So no rtc technically required on the second since you can't have a second without a first. But I've don't ever recall that wording in reg. Z. I'll check it tomorrow. And there's one they didn't include. No rtc if borrower can show that the three day wait would cause a financial hardship (for example, they'd lose the house if they had to wait the three days).

Reply by janCA on 12/2/07 11:38am
Msg #223961

Re: Sounds incomplete at best.

I've never seen this on a piggyback, ever. Just had one the other night and there was an RTC. Again, inaccurate info from the NNA and again too many certifications out there that are not based on correct and accurate information.