[Jstanford]

Is a new Right of Rescission required when renewing a HELOC before Maturity?

[kowsley]

There are specific situations that target the right of rescission rules when dealing with an open-end line of credit, such as a HELOC. The requirements are housed in Reg. Z – 1026.15(a)(1)(i)and (ii):

(1)(i) Except as provided in paragraph (a)(1)(ii) of this section, in a credit plan 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:
Each credit extension made under the plan;
The plan when the plan is opened;
A security interest when added or increased to secure an existing plan; and
The increase when a credit limit on the plan is increased.

(ii) As provided in section 125(e) of the Act, the consumer does not have the right to rescind each credit extension made under the plan if such extension is made in accordance with a previously established credit limit for the plan.

If the HELOC is being renewed (not refinanced) before maturity and none of the above situations are occurring then there is no required right of rescission.

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