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We have an unmarried couple that have a residential real estate loan together but the deed is only in the name of one of the borrowers. They are splitting up and the other borrower will be refinancing the existing obligation along with additional funds and the deed will be transferred to that individual. The additional funds will be paid to the individual that currently holds the deed. For TRID purposes do we consider this a refinance since we are replacing the existing obligation of the applicant? Or is it a purchase since the original owner of the collateral is receiving funds from the new loan? We know right of recession will apply since the applicant is currently living in the residence. How will this breakdown show on the disclosures?
Per TRID section §1026. 37(a)(9) this is a refinance regardless of who is on the deed. Since they are both on the original loan note. “Not for “purchase”, and if the credit will be used to refinance an existing obligation, but without regard to whether the creditor is the original creditor or a holder or servicer of the original obligation, that is secured by the property identified in paragraph (a)(6),”. State law may be the only thing that may change the purpose of this.
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