![]() ![]() To be a consumer within the meaning of § 1026.2, that person must at least have an ownership interest in the dwelling that is encumbered by the creditor's security interest, although that person need not be a signatory to the credit agreement. ![]() Thus, even though an interest in the consumer's principal dwelling is not a required disclosure under § 1026.18(m), it may still give rise to the right of rescission.Ģ. Although liens arising by operation of law are not considered security interests for purposes of disclosure under § 1026.2, that section specifically includes them in the definition for purposes of the right of rescission. The creditor obtains a lien and completion bond that in effect satisfies all liens against the consumer's principal dwelling as a result of the credit transaction. All security interests that may arise in connection with the credit transaction are validly waived.Ĭ. A mechanic's or materialman's lien is obtained by a contractor who is not a party to the credit transaction but is merely paid with the proceeds of the consumer's unsecured bank loan.ī. The security interest is not part of the credit transaction and therefore the transaction is not subject to the right of rescission when, for example:Ī. A mechanic's or materialman's lien that is retained by a subcontractor or supplier of the contractor-creditor, even when the latter has waived its own security interest in the consumer's home. A security interest that is acquired by a contractor who is also extending the credit in the transaction.ī. In order for the right of rescission to apply, the security interest must be retained as part of the credit transaction. Security interest arising from transaction. ![]()
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