A borrower refinances a rental property they own and occupy as their primary residence 6 months per year. The lender treats it as an investment property and doesn't provide rescission rights. Is this correct?
Correct Answer
C) No, the borrower should have rescission rights if it's their principal dwelling
Under TILA Section 125, rescission rights apply when the borrower's 'principal dwelling' secures the loan. A principal dwelling is determined by where the borrower maintains their primary residence, not exclusively by rental status. If the borrower lives there as their primary residence for a substantial portion of the year, it may qualify as their principal dwelling.
Why This Is the Correct Answer
Under TILA Section 125, rescission rights apply when the borrower's 'principal dwelling' secures the loan. A principal dwelling is determined by where the borrower maintains their primary residence, not exclusively by rental status. If the borrower lives there as their primary residence for a substantial portion of the year, it may qualify as their principal dwelling.
More Federal Laws Questions
A mortgage broker's website states 'Qualified borrowers can get loans with down payments as low as 3%.' Which statement about TILA advertising requirements is correct?
A loan's APR increases from 4.25% on the Loan Estimate to 4.35% on the Closing Disclosure due to a rate lock expiration. What action is required?
A lender originates a mortgage that meets all QM requirements. Three years later, the borrower defaults and claims the lender violated the ATR rule. What legal protection does the lender have?
For a closed-end mortgage loan, when must the creditor provide the Closing Disclosure to the borrower?
Which of the following documents must be provided to trigger the start of the 3-day rescission period?
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