Posted by HisHughness on 11/10/10 1:48pm
Msg #360585

Haven't run across this before

Had a situation last night I have not previously encountered.

Two males jointly own homes in Texas and another state. One declares the Texas property as his homestead; the other declares the out-of-state property as his homestead. They are refinancing the Texas property.

Question: Does the borrower who declares the out-of-state property as his homestead have a right of cancellation on the refinance of the Texas property?

Title sent RTCs for both parties. However, I think the Texas property constitutes a second home for the out-of-state homesteader, and he isn't entitled to a right to cancel. Thoughts, please.

Reply by ReneeK_MI on 11/10/10 2:00pm
Msg #360590

Sounds like it was just the easiest way around the situation. With one having a required RTC, extending that to the other doesn't go against any law and just keeps it simple. Otherwise, each file would have to carry some kind of head's up flag explaining the rhyme & reason.

Reply by Lee/AR on 11/10/10 2:04pm
Msg #360592

Agree w/ReneeK MI. Clever, too, if they are getting some sort of homestead exemption or tax break in each state.

Reply by HisHughness on 11/10/10 2:09pm
Msg #360596

Sorry, but I think there are legal ramifications; it isn't just a "simple" way to handle itl

If the out-of-state homesteader decides to cancel, and because he has no legal right to do so the lender declines to honor the cancellation, there is one big mess. I'm a part of that mess, since as part of the presentation I've told them either can cancel unilaterally.

Unfortunately, I began to sort all of this out AFTER the signing. I don't think there are going to be any issues, but it does present an interesting problem.

Reply by SharonMN on 11/10/10 3:29pm
Msg #360616

My understanding is that the law is the minimum required. If the lender wants to extend cancellation rights further, that's OK. By giving the non-homesteaded guy the RTC form and having him sign it, the lender is telling him he has a RTC. Kind of like some lenders give you more than 3 days to cancel, or don't count Saturdays.

Hugh wrote:
If the out-of-state homesteader decides to cancel, and because he has no legal right to do so the lender declines to honor the cancellation, there is one big mess.

Reply by ReneeK_MI on 11/10/10 2:10pm
Msg #360597

That's what I thought, Lee! n/m

Reply by PAW on 11/10/10 2:08pm
Msg #360593

I had a similar situation quite a while back with FL property and GA property. Just as you said, both owners (in this case it was a man and a woman, but that's irrelevant) each claimed homestead on one property, not the same property as the other owner. Thus in the other owner's case, the property was treated as a second home. BUT, according to underwriting, since both owners had a vested interest in the property, if one owner qualified for homestead and as their primary residence, then the RTC would be effective for ALL owners. In other words, the way I understand it, if any owner qualifies for a right of rescission, then all owners would qualify as well.

So, in your case, the way it was handled here, would entitle BOTH parties the right of rescission. I would be very interested to hear how this works out with your Texas property.

Reply by ReneeK_MI on 11/10/10 2:12pm
Msg #360598

Dead-on, Paul (as if there would be doubt?!)

TILA:

a) Consumer's right to rescind. (1) In a credit transaction 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 the transaction, except for transactions described in paragraph (f) of this section.

Reply by LindaP/OH on 11/10/10 2:42pm
Msg #360603

Re: Dead-on, Paul (as if there would be doubt?!)

Interesting discussion, but I would not take on the responsibility to determine who is to sign what and what legal ramifications are involved on this situation. If there are red flags, we should be calling for instruction--call title, they should be making a decision on this, not us. Period! My job is to identify signers and then notarize their signatures--if there are questions cannot answer, I'm not going to guess, too much liability for me. These discussions are interesting, but I think there can be too much interpretation of the law and thereby UPL--and then overstepping our role.

Reply by nobhill on 11/10/10 2:25pm
Msg #360602

Unless you're a lawyer, I don't know if this is your responsibility, only if one you thought was missing. Otherwise if you began telling them what you think is correct, it's in the realm of unauthorized practice of law. We can't even choose the type of notarization we use without the wording, how can we be responsible for telling the title agency what the proper law is regarding the issue you raised?

Reply by Tess on 11/10/10 2:44pm
Msg #360604

Cheryl,

You have to figure out and understand when a discussion is a philosophical one or if the person is asking for help, or if they are someone who really does not now their boundaries.

In this case, the above posters have been in business a lot longer then you, and I do believe this is a philosophical discussion on this subject. Although you are right about us not discussing the differences with the borrower, we as professionals in this business, would also like to know why things are done the way they are done!

Reply by Tess on 11/10/10 2:49pm
Msg #360605

Re: Darn...Know n/m

Reply by ReneeK_MI on 11/11/10 6:03am
Msg #360735

Very well said, Tess =) n/m

Reply by SueW/Tn on 11/10/10 3:06pm
Msg #360610

Hugh IS an attorney

He usually runs things past us all that are "new" or "different" to help further our education in case we stumble across it at another time.

Reply by HisHughness on 11/10/10 3:09pm
Msg #360611

***Unless you're a lawyer, I don't know if this is your responsibility***

I am a lawyer, and I DO know that this is not MY responsibility. It becomes my CONCERN, however, if it has the potential for negatively impacting me.

Thanks for the insight, PAW. I shall stack this beside fluoride in drinking water, missing weapons of mass destruction, and my first ex-wife's threat to have me neutered as things I no longer need worry about.

The second ex-wife's similar threat, though, remains unresolved.

Reply by Linda_H/FL on 11/10/10 3:09pm
Msg #360612

Great discussion here....my thoughts

for what they're worth -

RTC is determined not by homestead status but by ownership interest...whoever has an ownership interest in the property has the right to rescind the loan. Now, if both are signing off on this property as THEIR primary residence (the Occupancy Affidavit) then someone's lyin'....

Reply by Stamper_WI on 11/10/10 3:32pm
Msg #360617

Re: Great discussion here....my thoughts

I agree with Linda.
I owned a house with my Dad. I lived there, he did not. When I took out a mortgage to pay him off on his third ownership, he had to ok on the loan. Since it was considered a purchase (owned free and clear by the 2 of us) there was no RTC but they had to consider the ownership interest he had if only briefly and on paper.
What was interesting to me was that although I owned 2/3 and borrowing only 1/3 of the value they would not accept my 2/3 intererst as collateral. He could technically over ride.

Reply by Glenn Strickler on 11/10/10 3:57pm
Msg #360627

Re: Great discussion here....my thoughts

My wife and I own a home jointly with my mother-in-law. The mother-in-law lives in the home in NorCal while we live in SoCal. When we refinanced the NorCal property, each one of us could have exercised the RTC. I have not had experience with property in different states, but I don't know why there would be a difference if the NorCal property were actually in Nevada. Shares of ownership are shares of ownership.

Reply by C. Rivera Chicago Notary Services on 11/10/10 5:30pm
Msg #360655

it doesn't matter who declares homestead as they both

are on title.....so did I miss something?

Reply by C. Rivera Chicago Notary Services on 11/10/10 5:33pm
Msg #360657

I posted before I read Liinda's post and she's correct! n/m