Posted by KCity on 12/18/04 10:38pm
Msg #14075
RTC - Refi only?
I'm new, still learning...don't shoot! I've tried the "search" but didn't find the answer.
Is the recisssion period for refi only? This is what I read in Victoria Ring's book but since I have come accross this terminology so much and never a mention that it is only for refi until the book, I needed the verification.
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Reply by PAW Notary Services on 12/18/04 10:51pm
Msg #14076
The following is taken directly from Title 12:
(a) Consumer's right to rescind. (1)(i) Except as provided in
paragraph (a)(1)(ii) of this section, in a credit plan in which a
security interest is or will be retained or acquired in a consumer's
principal dwelling, each consumer whose ownership interest is or will be
subject to the security interest shall have the right to rescind: each
credit extension made under the plan; the plan when the plan is opened;
a security interest when added or increased to secure an existing plan;
and the increase when a credit limit on the plan is increased.
What this means is the consumer (borrower) that is refinancing or creating additional loans to an already existing first mortgage (i.e. HELOCs, full seconds, etc.) has a right to a three day rescission period, on the primary residence only.
So, Victoria Ring is right in that refi's (on primary residences) must have an RTC, but it's not the only time the RTC is used. If someone takes out a second or even a third mortgage, establishes a home equity line of credit (HELOC), that too requires an RTC.
You can read the entire section on the RTC at http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/cfr_2002/janqtr/12cfr226.15.htm
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