Posted by SheilaSJCA on 7/6/05 4:58pm
Msg #50106

is it normal to see a RTC on a 2nd (attached to a purchase?)

Is it typical/normal for the 2nd to have a RTC, if it is a purchase transaction? What if the RTC puts it beyond the scheduled closing date?

Reply by BrendaTX on 7/6/05 5:04pm
Msg #50110

Sheila,

I am glad you asked that because I don't know the answer...I look forward to finding out.

Reply by patricia on 7/6/05 5:45pm
Msg #50129

yes it is normal, the second loan does have the right to cancel.

Reply by Iris_WA on 7/6/05 5:07pm
Msg #50114

Gee, Sheila, I've never heard of an RTC on a purchase -- period. Will be interested to learn the outcome if you find out.

Reply by BrendaTX on 7/6/05 5:08pm
Msg #50116

I am aware there is not a RTC on the 1st, but it's the 2nd that threw me.

Reply by Nd_WA on 7/6/05 5:36pm
Msg #50126

The 2nd is probably being done simultaneously but would be separate from the 1st/purchase.

I did one like this back in my RE days where the buyer put down a big chunk of non-refundable earnest money for a property they wanted badly. Buyer would then do a second in conjuction with the purchase to get cash for improvement or decorating of the new home.

Both loans may close on the same day but funding for the 2nd has to wait until RTC expired. This has no affect on the seller.

Reply by BarbaraL_CA on 7/6/05 5:28pm
Msg #50124

Re: is it normal to see a RTC on a 2nd (attached to a purcha

I had a purchase that included a home equity loan with it. The HELOC had an RTC.
Is this what you have? Many people call it a 2nd when in fact it is a line of credit.

Reply by Ernest__CT on 7/6/05 5:32pm
Msg #50125

Huh? Please educate me.

John Smith buys a home and *at the same signing* gets a HELOC?

Reply by BarbaraL_CA on 7/6/05 5:38pm
Msg #50127

Re: Huh? Please educate me.

Yep...that's what it was! Evidently the purchase price was less than the market value and they tapped into the equity at the same time.

Reply by SheilaSJCA on 7/6/05 6:21pm
Msg #50140

Re: is it normal to see a RTC on a 2nd (attached to a purcha

I didn't look at the loan amounts closely to see if it was part of the purchase money or as others indicated a heloc for after the closing. I was just wondering, and a bit curious, as I had 2 last week.

Reply by Sherri_IN on 7/6/05 5:53pm
Msg #50130

This is one of those gray areas. On a purchase money mortgage/deed of trust there is no RTC. Here is the gray area, if they are doing an 80/15 or 80/20 then there would most likely be no RTC because the 15 or 20 is being used to purchase. If they are doing a 2nd/equity line and they are using the equity that is already there due to low purchase price or large earnest money then it is not a purchase money 2nd and would have RTC.

Hope this helps and doesn't make it more confussing.

"This is not a legal opinion and I am not offering any legal advise"

Reply by BeccaFL on 7/6/05 6:02pm
Msg #50133

Re: is it normal to see a RTC on a 2nd (attached to a purcha

There is not usually a right to cancel on any purchase loans. Typically the 2nd or HELOC would be done as a refi cash out and that would be a standard form that is in the closing package and probablly would not apply. If you are doing an 80/20 on a purchase a lot of times the buyer will get a HELOC instead of a closed end second so that they would have the ability to use the equity on the home as they pay it down without having to refi and pay closing costs a second time. Most likley this form was just put in the package by mistake or by default. This has happened to me before so that is why I am suggesting this.

Reply by sue on 7/6/05 6:04pm
Msg #50134

Re: is it normal to see a RTC on a 2nd (attached to a purcha

I do a lot of purchases and most of them contain 2 loans. The majority of them contain a RTC for the second and it's not a mistake.

Reply by BeccaFL on 7/6/05 6:13pm
Msg #50137

Re: is it normal to see a RTC on a 2nd (attached to a purcha

Like I said, this has come up in a loan that I closed before. I have processed hundreds of mortgage loans, and the only 2nd's that I have seen with a RTC are refi's. If you buy a home say with an 80/20 and close on the first and second in the same day, but then you had 3 days to cancel the 2nd before it funds the entire purchase would have to be held as a dry closing until the 2nd funded. I have never seen that happen but I guess it is possible

Reply by sue on 7/6/05 6:29pm
Msg #50143

Re: is it normal to see a RTC on a 2nd (attached to a purcha

The first time I saw this I politely excused myself from the room and called the title company from another room. She had just seen it too when she was looking at the list of docs I had to fax for the funding number. She said to have it signed. I went back in - one realtor thought it made sense, the other (like me) thought it didn't. Since that time, I've never questioned it again. Not my job to know all the ins and outs of this stuff (my head would explode if I had to also know everyone else's job) but I see it often enough to know that it wasn't an error.

Reply by PAW_Fl on 7/6/05 7:05pm
Msg #50148

Re: is it normal to see a RTC on a 2nd (attached to a purcha

The catch as to whether or not the 2nd has an RTC when signed simultaneously with a purchase is if the proceeds of the 2nd are applied to the first as part of a buy down or down payment. In those cases, then there usually isn't an RTC in the package. However, if the proceeds are used to completely fund the purchase, as in an 80/20 deal, for example, though the proceeds are not being applied to the first, it is still considered funding for the purchase of the home and does not fall within Title 12, but often the RTC is included in the package. Now, if the full purchase price is being paid by the first mortgage and down payment by the borrower, and the second is provided on the equity of the property (effectively allowing the borrower to recoup their down payment), then the RTC is effectual.

Reply by Bob-Chicago on 7/6/05 10:50pm
Msg #50197

Can't cite any authority, but as I understand it....

if on a purchase, there is a !st and a HELOC, and if only a portion of HELOC is disbursed for the purchase, then there is a RTC as to the undisbursed portion of the HELOC.
The funds disbursed for the purchase are not subject to a RTC as the seller (or those being paid off by seller) receives the funds, and can not be a position to have to pay them back if a RTC was exercised.

Reply by PAW_Fl on 7/7/05 7:30am
Msg #50241

Re: Can't cite any authority, but as I understand it....

Bob, that logically doesn't make any sense. If the RTC is invoked, the entire loan/mortgage is rescinded, in its entirety. You cannot rescind a portion of a loan. Therefore, if any portion of the proceeds of a 2nd, whether it be a standard fixed rate/ARM or HELOC, is used to fund the first, there would be no RTC as the proceeds, even in part, are being applied to a purchase.