The CFPB recently issued an Interpretive Ruling regarding certain Regulation Z waiting periods as well as a FAQ Document on the appraisal/valuation rules of Regulation B. These are intended to clarify requirements for consumers facing financial emergencies due to COVID-19 and help get them quicker access to mortgage credit. The Interpretive Ruling essentially confirms that COVID-19 is an extraordinary event, similar to a war or natural disaster, and could be the basis for a personal financial emergency, if consumers need funds as a result of the COVID-19 pandemic.
You may recall that Regulation Z allows a consumer to waive TRID’s seven-business day (after delivering a Loan Estimate) and three-business day (after receiving the Closing Disclosure) wait to close and/or the three-day rescission period, IF the consumer has a bona fide personal financial emergency. If you will allow such a waiver, you must still comply with the documentation requirements. Specifically, the consumer must give a dated, written statement requesting the waiver and include a brief description of the emergency. This statement must be signed by all consumers entitled to the TRID waiting period(s) or right to rescind, as applicable.
COVID-19 is also deemed to be the basis for an appropriate changed circumstance which would allow creditors to use revised estimates reflecting changes in settlement charges for purposes of determining good faith, if the COVID-19 pandemic has affected the charge. The CFPB, again, believes this is an extraordinary event beyond the control of any interested parties.
The FAQ Document basically reiterates that Regulation B already includes flexibility to waive the requirement to provide a copy of an appraisal/valuation promptly upon completion and at least three business days prior to loan closing. If an institution will allow a waiver, they must generally receive an affirmative oral or written statement from the applicant(s) at least three business days prior to closing and must still provide the copy at or before loan closing.
The CFPB also released two Factsheets on the appraisal/valuation rule. They addressed 1) coverage and 2) delivery method and timing requirements.
The Delivery and Timing Factsheet illustrates when closing can take place based on different delivery methods, by mail, in hand and email. It also provides reminders for when a waiver of the timing requirements can be made by the applicant. The Coverage Factsheet actually left us with some questions. Our Team has reached out to the CFPB for clarification and we hope to bring that to you soon. Stay Tuned.
Be sure to check out other COVID-related guidance in our May Magazine.
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David’s banking career began as a field examiner for the FDIC in 1990. He later became a Compliance Officer and Loan Officer for a small bank. In 1993, he established Banker’s Compliance Consulting. Along with his amazingly talented Team, he has written numerous compliance articles for prestigious banking publications and has developed compliance seminars that Banker’s Compliance Consulting produces.
He is an expert in compliance regulations. He is also a motivational speaker and innovative educator. His quick wit and sense of humor transforms the usually tiring topic of compliance into an enjoyable educational experience. David is on the faculty of the American Bankers Association National Compliance Schools and has served on the faculty of the Center for Financial Training for many years. He also is a frequent speaker at the ABA’s Regulatory Compliance Conference. He is also a trainer for hundreds of webinars, is a Certified Regulatory Compliance Manager (CRCM) and has been a BankersOnline Guru for many years. The American Bankers Association honored David with their Distinguished Service Award in 2016.
David and his wife Karen have three adult children, four grandchildren (none of whom live at home!) and two cats (of which Dave is allergic … the cats, not the children!). They recently moved to an acreage outside of Lincoln, Nebraska where he gets to play with his tractor. When possible David can be found fishing, making sawdust in his shop, or playing the guitar and piano. He also enjoys leading worship at his church.