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We are doing a consumer home loan and are unsure for what Purpose for the loan to use. We had an applicant that is purchasing her mother’s house. The mother has an outstanding mortgage with our Bank. This payoff will be the amount of payoff of the loan. She came in on September 1st to apply for the loan. The next day we found out the property was transferred by deed to the applicant the next day September 2nd but it was transferred from the applicants brother to to the applicant. (At some point in time the mother transferred the property by deed to her son even though there was an outstanding mortgage with our Bank.) The LE was given with a Purchase Purpose. Since the applicant is now owner of the deed (but has proceeds have not been given to the seller) do we treat the loan as a Purchase on the LE and CD? Or do we say it is now Home Equity, using the equity in the property to payoff the loan? Do we give Right of Recission?
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