Amid the COVID-19 pandemic, many consumers are seeking quicker access to credit to meet their financial needs. On April 29, 2020, the Consumer Financial Protection Bureau (CFPB) issued an interpretive rule and compliance aid addressing the waiver of certain regulatory timeframes impacting the consumer mortgage origination process.
Which regulations are temporarily waived or altered?
CFPB’s April 29, 2020 interpretive rule affects certain provisions of the TILA-RESPA Integrated Disclosure Rule (a.k.a. Know before You Owe rule), Truth in Lending (a.k.a. Regulation Z) Right of Rescission Rules and Equal Credit Opportunity Act (a.k.a. Regulation B) Valuations Rule. Both TRID and Right of Rescission impose certain disclosure and waiting period requirements prior to loan consummation or funding, while Regulation B outlines when lenders must provide applicants copies of appraisals and/or other written valuations.
What does this mean for consumers?
Essentially, CFPB’s interpretive rule allows consumers (after receiving the required disclosures under Regulation Z) to modify or waive waiting periods if they determine their credit need represents a bona fide personal financial emergency due to the COVID-19 pandemic.
What does this mean for financial institutions?
Financial institutions are encouraged to notify impacted consumers during the pandemic of their ability to modify or waive waiting periods for bona fide personal financial emergencies.
In order to modify or waive waiting periods, creditors will need to obtain a dated and written statement from the consumer that:
- Describes the emergency
- Specifically modifies or waives the waiting period
- Bears the signature of all consumers who are primarily liable on the obligation (TRID Rule) or who are entitled to rescind (Rescission Rule).
CFPB also concludes that the COVID-19 pandemic is a “changed circumstance” for purposes of certain TRID Rule provisions, allowing creditors to use revised estimates reflecting changes in settlement charges for purposes of determining good faith.
Additionally, CFPB issued a single question FAQ to address the flexibility under Regulation B’s Valuations Rule when providing valuations to applicants. The Bureau reiterates that the Rule already includes flexibility and allows applicants to waive certain timing requirements. The applicant is permitted to do so through an affirmative oral or written statement and agree to receive any copy of the valuation at or before consummation or account opening.
Read the CFPB’s interpretive rule and FAQ document for full detail on these actions. RKL’s Financial Services Industry Group is here to help lenders adopt these regulatory changes or answer any questions about implementations. Contact your RKL advisor or reach out using the form below.