Right of rescission does apply to which of the following transactions?

Right of rescission does apply to which of the following transactions?

• A. Refinances
• B. Piggyback loans on current property
• C. Both refinances and piggyback loans on current property
• D. New construction loans

Answer: (C)

The right of rescission is the cooling-off period under the Truth in Lending Act that applies to loans secured by the borrower’s principal dwelling when the loan is for refinancing or for a second lien on that same dwelling. Since both refinances and piggyback loans involve a security interest in the borrower’s primary residence, they trigger rescission rights. A new construction loan doesn’t fit this scenario because it funds building a home and isn’t a refinance or a second lien on an existing principal dwelling. So, rescission applies to both refinances and piggyback loans on current property.

The right of rescission is the cooling-off period under the Truth in Lending Act that applies to loans secured by the borrower’s principal dwelling when the loan is for refinancing or for a second lien on that same dwelling. Since both refinances and piggyback loans involve a security interest in the borrower’s primary residence, they trigger rescission rights. A new construction loan doesn’t fit this scenario because it funds building a home and isn’t a refinance or a second lien on an existing principal dwelling. So, rescission applies to both refinances and piggyback loans on current property.