CFPB Issues Regulation Z Interpretive Rule and ECOA Waiting Period FAQ

The CFPB recently published an interpretive rule concerning “bona fide personal financial emergencies” and changed circumstances under TRID, in the context of the COVID-19 crisis.

The CFPB’s new interpretative rule, effective May 4, 2020, provides that COVID-19 may cause a “bona fide personal financial emergency” and may be considered a “changed circumstance” under specific conditions.

Under the CFPB’s new interpretative rule, a consumer has a “bona fide personal financial emergency” permitting the consumer to waive certain waiting periods if:  (i) the consumer determines that he or she needs the extension of credit in order to meet a bona fide personal financial emergency; (ii) the consumer submits a brief statement describing the emergency that identifies a financial need related to COVID-19; and (iii) the identified emergency necessitates obtaining the credit prior to the end of the TRID waiting period or the waiting period under Regulation Z’s Rescission Rule, all subject to the applicable procedures under TRID and the Rescission Rule.  The CFPB is encouraging creditors to inform consumers of the availability of the modification and waiver provisions under TRID and Regulation Z.

The interpretative rule also classifies the COVID-19 pandemic as a “changed circumstance,” which will allow creditors to revise the estimated settlement charges.  The requirement of “changed circumstances” may be met “if the COVID-19 pandemic has affected the estimate of such settlement charges.”  In such cases, creditors are allowed to use revised estimates of settlement charges in connection with a mortgage transaction.

In addition to the interpretive rule, the CFPB has also issued new guidance related to appraisal disclosure obligations under ECOA.  The CFPB’s new guidance reminds interested parties that ECOA allows an applicant to waive certain timing requirements through an affirmative written or oral statement if they agree to receive a copy of the valuation at or before completing the transaction or opening the account, if applicable.  The CFPB notes that this flexibility allows creditors to adapt to complications caused by COVID-19.