SLG Client Update : CFPB Relaxes Loan Disclosure and Rescission Rules in Response to C-19

DISCLAIMER: The following contains general principles of law that cannot be applied to every case. Some issues covered are subject to developing case law and legislation that cannot be forecast or predicted with certainty. In the event that you encounter issues covered in this alert, you should review the appropriate response with counsel experienced in this area of law and should update the status of any regulation or legislation mentioned.

Date: April 29, 2020
To: All Scheer Law Group Clients and Affiliates
From: Spencer Scheer
Subject: CFPB Relaxes Loan Disclosure and Rescission Rules in Response to C-19.

The COVID -19 (“C-19”) crises has now extended its tentacles into consumer loan origination. The CFPB announced today that it is relaxing the standards applicable providing final loan costs estimates under TRID and for a borrower to waive the TILA right to rescind a consumer loan, to make it easier for consumers to obtain credit, without delay.

A. TRID:

•  Final estimate of loan charges has to be provided in good faith 7 business days before consummation.
•  For purposes of determining good faith, revised loan estimates can be used in limited situations. One such situation is “changed circumstances.” C-19 related changes now qualify as a changed circumstance. For example: If disclosure of an appraisal cost changes and is increased because of a shortage of appraisers due to the C-19 crises, the revised cost can be deemed in good faith.

B. TILA Right of Rescission:

•  A borrower on a covered loan has three business days from consummation to rescind a loan. Accordingly, lenders must wait three days from consummation to close the loan.
•  A borrower can waive the three day waiting period if:
• The waiver describes a bona fide emergency;
• There is a waiver or modification of the waiting period.
• The waiver bears the signature of all consumers liable on the loan
•  C-19 related issues can now be deemed a bona fide emergency.

C. Effective Date:

•  The CFPB has accelerated the effective date to be the date of publication of the rule in the Federal Register (and not subject to the general 30-day delay).

D. Where you Can Find the Announcement and Rule:

The announcement and link to the interpretative advisement can be found at:
https://www.consumerfinance.gov/about-us/newsroom/cfpb-paves-way-consumers-facing-financial-emergencies-access-mortgage-credit-quickly/.

Please call or email if you have questions.

Spencer Scheer