For open-end loans (i.e. HELOCs), the model rescission forms are set forth in Appendix G of Truth in Lending (Regulation Z) and referenced in 12 CFR § 226.15. These forms address scenarios in which a consumer opens a HELOC account, increases the HELOC credit limit, adds a security interest, or increases the security. Below is a list of the Reg. Z model forms, links to the DocMagic versions of the forms, and what logic is in place.
1) Model Form G-5 (When Opening an Account)
Our modified form is HENRCG5.HLC. This form is selected when the loan type is an equity line, the property type is owner-occupied and not a second home, and the loan purpose is either a refinance, junior, 3rd, 4th, streamline refinance, home improvement, or home improvement consolidation.
2) Modified Model Form G-5 (When Funds are Used for Purchase)
When a loan has purchase money and non-purchase money funds, the non-purchase money funds are subject to the right of rescission, while the purchase money funds are not. In this scenario, our modified form is HENRCP.HLC. This form is selected when the loan type is an equity line, the property type is owner-occupied and not a second home, and the loan purpose is either purchase or purchase money junior. For more information about this form, see our prior article here.
3) Model Form G-7 (When Increasing the Credit Limit)
Our modified form is HENRCG7.HLC. This form is selected when the loan type is an equity line, the property type is owner-occupied and not a second home, and the loan purpose is an increase in the credit limit.
Please note, however, that some investors may have their own rescission forms or give us different form selection instructions. In those cases, we will default to the investor's specifications.
DSI's Compliance Department invites you to review our other articles on the Notice of Right to Cancel:
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