A borrower wants to use a HELOC to purchase an investment property. Which statement is correct regarding this scenario?
Correct Answer
C) The borrower retains the right of rescission if the HELOC is secured by their principal dwelling
The right of rescission under TILA applies to credit secured by the consumer's principal dwelling, regardless of how the proceeds are used. Even if the borrower uses HELOC funds to purchase an investment property, they retain rescission rights because the HELOC is secured by their principal residence.
Why This Is the Correct Answer
The right of rescission under TILA applies to credit secured by the consumer's principal dwelling, regardless of how the proceeds are used. Even if the borrower uses HELOC funds to purchase an investment property, they retain rescission rights because the HELOC is secured by their principal residence.
More Mortgage Knowledge Questions
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