The CFPB (Consumer Financial Protection Bureau) has recently issued an interpretive rule under Regulation Z for TRID and Right of Rescission waiting period requirements. Under the TRID Rule, creditors generally must deliver or place in the mail the Loan Estimate to consumers no later than seven business days before consummation and consumers must receive the Closing Disclosure no later than three business days before consummation. The Regulation Z Rescission Rules also provide consumers with at least three business days from consummation to rescind certain credit obligations secured by the consumer’s principal dwelling, and creditors are required to provide consumers with a disclosure informing them of this rescission right. Under the TRID Rule and the Regulation Z Rescission Rules, however, after receiving the required disclosure(s), a consumer may modify or waive these waiting periods if the consumer determines that he or she needs credit extended to meet a bona fide personal financial emergency.
Under the interpretive rule, the CFPB has determined that the COVID-19 pandemic could be considered a bona fide personal financial emergency for affected consumers. This is not a change in the regulation but clarification that COVID-19 may be a reason to waive timing requirements if a personal financial emergency has occurred such as job loss or quarantine. The rules still require for the waiting periods to be modified or waived, the creditor must have a dated written statement by the consumer that: (1) describes the emergency, (2) specifically modifies or waives the waiting period, and (3) bears the signature of all consumers who are primarily liable on the legal obligation (for the TRID Rule) or who are entitled to rescind (for the Regulation Z Rescission Rules).
In addition, the CFPB recognized that the pandemic may also create valid changed circumstances in some instances that would permit a creditor to provide revised disclosures to consumers to reset tolerances for closing costs. Financial institutions should use caution and document why the pandemic caused the changed circumstance and deliver revised disclosures within three business days of learning of the changed circumstance in accordance with established TRID requirements.
The CFPB’s interpretive rule can be found here: