The Consumer Financial Protection Bureau is relaxing certain disclosure requirements for consumers who have a financial emergency due to the coronavirus pandemic and need to obtain funds through the quick closing of a loan.
The CFPB issued an interpretive rule Wednesday clarifying that consumers can exercise their rights to modify or waive waiting periods required by the Truth in Lending Act and the Real Estate Settlement Procedures Act, known as TRID.
The CFPB is encouraging mortgage lenders to voluntarily tell consumers of their ability to obtain waivers for certain required waiting periods under TRID, which is codified in Regulation Z.
“The steps we are taking today will help consumers facing financial emergencies obtain access to mortgage credit faster,” CFPB Director Kathy Kraninger said in a press release. “The pandemic is resulting in consumers facing various challenges, and our temporary and targeted solutions are intended to ensure that consumers receive the credit they need in a timely manner.”
The CFPB said that the waiting period under TRID may result in the delay of some transactions for consumers who have a bona fide personal financial emergency.
Under the new guidance, the CFPB will allow a consumer with a financial emergency to waive waiting periods if three conditions are met: the extension of credit is needed to meet a financial emergency; the consumer provides a brief statement saying the financial need is due to COVID-19; and the emergency necessitates closing a mortgage credit transaction before the end of TRID's waiting period.
Under TRID, creditors generally must deliver a loan estimate to a consumer no later than seven business days before the loan’s closing, and consumers must receive a closing disclosure no later than three business days before the loan closes.
TRID was designed to eliminate sticker shock from borrowers facing significantly higher charges at the closing table compared to what was originally disclosed.
