Model Form H-8 vs. H-9 (2024)

Posted By: Anonymous

ROR - Model Form H-8 vs. H-9 - 09/05/03 04:41 PM

Does it really matter which of the above forms is used as ensuring that the appropriate one is used would likely be a major undertaking for our operations?

Thank you!!!

Posted By: JSD

Re: ROR - Model Form H-8 vs. H-9 - 09/05/03 04:54 PM

We had difficulty getting the right form for the type of situation so we created a combined form and then just check the block for which situation is applicable.

Re: ROR - Model Form H-8 vs. H-9 - 09/05/03 06:04 PM

This use to be a big deal and a subject of a number of lawsuits, however you can look to the OSC at 226.2(25)- comment-6 for guidance:

6. Specificity of disclosure. A creditor need not separately disclose multiple security interests that it may hold in the same collateral. The creditor need only disclose that the transaction is secured by the collateral, even when security interests from prior transactions remain of record and a new security interest is taken in connection with the transaction. In disclosing the fact that the transaction is secured by the collateral, the creditor also need not disclose how the security interest arose.

For example, in a closed-end credit transaction, a rescission notice need not specifically state that a new security interest is ``acquired'' or an existing security interest is ``retained'' in the transaction.

The acquisition or retention of a security interest in the consumer's principal dwelling instead may be disclosed in a rescission notice with a general statement such as the following: ``Your home is the security for the new transaction.''

Posted By: Dutch Treat

Re: ROR - Model Form H-8 vs. H-9 - 09/08/03 05:27 PM

Yes, it still does matter which form you use. The commentary section to 226.2-25 is referring to whether the security interest is acquired or retained. Rescission doesn't really care about the difference. H-8 and H-9 refer to the funds borrowed and the fact that a "security interest has been taken in your home". I believe this question arose almost 10 years ago along with the Rodash case. My memory is a little fuzzy, but the Rodash case is responsible for giving us additional tolerances on mortgage loans. Along with that, a quick study was done of major mortgage lenders across the nation. It was estimated that there was not enough capital in the banking system to pay off the class action suits that would result from using the wrong form. Hence, Congress also enacted in 1995, a 'class action moratorium', saving everyone's bacon. [See the Consumer Credit Protection Act at 15 USC 1601 sec. 130 (h)(i)(1)(B)(iii).] So, yes, it does still matter. See 226.23(h)(1)(ii). We were supposed to have learned our lesson.

Posted By: David Dickinson

Re: ROR - Model Form H-8 vs. H-9 - 09/08/03 09:05 PM

I don't think it matters. I remember a lawsuit a number of years ago (I can't remember the names) where the judge ruled "a rescission notice is a rescission notice is a rescission notice."

Posted By: Howard Lax

Re: ROR - Model Form H-8 vs. H-9 - 09/09/03 01:34 PM

Decisions in rescission cases are all over the board. I do not recommend relying on one court decision for any deviation from the regulation and commentary in a rescission disclosure policy. The courts treat these lawsuits as equity actions, with Section 23 providing guidance but not black letter law.

Posted By: GreatBlue

Re: ROR - Model Form H-8 vs. H-9 - 09/09/03 02:30 PM

How does this section of 226.23 affect your thinking on this issue?

"(h) Special rules for foreclosures.--(1) Right to rescind. After the initiation of foreclosure on the consumer's principal dwelling that secures the credit obligation, the consumer shall have the right to rescind the transaction if:
(i) A mortgage broker fee that should have been included in the finance charge was not included; or
(ii) The creditor did not provide the properly completed appropriate model form in appendix H of this part, or a substantially similar notice of rescission. "