CFPB Expedites Consumers' Access to Credit Under TRID Rule and Regulation Z Rescission Rules Requirements in Response to COVID-19 | Practical Law

CFPB Expedites Consumers' Access to Credit Under TRID Rule and Regulation Z Rescission Rules Requirements in Response to COVID-19 | Practical Law

The Consumer Financial Protection Bureau (CFPB) issued an interpretive rule which allows consumers to modify certain waiting periods required under the Truth in Lending Act (TILA)-Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure (TRID) Rule and Regulation Z Rescission Rules. The interpretive rule was issued in response to COVID-19 to expedite consumers' access to credit.

CFPB Expedites Consumers' Access to Credit Under TRID Rule and Regulation Z Rescission Rules Requirements in Response to COVID-19

by Practical Law Finance
Published on 13 May 2020 • USA (National/Federal)
The Consumer Financial Protection Bureau (CFPB) issued an interpretive rule which allows consumers to modify certain waiting periods required under the Truth in Lending Act (TILA)-Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure (TRID) Rule and Regulation Z Rescission Rules. The interpretive rule was issued in response to COVID-19 to expedite consumers' access to credit.
On April 29, 2020, the Consumer Financial Protection Bureau (CFPB) issued an interpretive rule which allows consumers to modify certain waiting period required under the Truth in Lending Act (TILA)-Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure (TRID) Rule. The interpretive rule was issued in response to the disruptive impact of COVID-19 on persons involved in the mortgage origination process, and the critical needs of consumers for proceeds from mortgage transactions.
Under the interpretive rule, effective May 4, 2020:
  • A consumer has a bona fide personal financial emergency that permits the modification and waiver under the TRID Rule and Regulation Z Rescission Rules if the need to obtain funds during the COVID-19 pandemic either:
    • necessitates consummating the credit transaction before the end of the TRID waiting periods; or
    • must be met before the end of the Regulation Z Rescission Rules waiting period.
  • The COVID-19 pandemic is considered a "changed circumstance" for purposes of certain TRID Rule provisions, which allows creditors to use revised estimates reflecting changes in settlement charges for purposes of determining good faith.

Bona Fide Personal Emergency

The TRID Rule enacts certain disclosure requirements and waiting periods related to mortgage transactions. The Regulation Z Rescission Rules provide consumers with the right to rescind certain credit transactions secured by their principal dwelling and impose waiting periods.
Generally, under the TRID Rule:
  • Creditors must deliver the loan estimate to consumes no later than seven business days before consummation.
  • Consumers must receive the closing disclosure no later than three business days before consummation.
Under Regulation Z Rescission Rules:
  • Consumers have at least three business days from consummation to rescind certain obligations secured by the consumer's principal dwelling.
  • Creditors are required to provide consumers with a disclosure informing them of this rescission right.
However, under the TRID Rules and the Regulation Z Rescission Rules, consumers may modify or waive waiting periods if they determine that they need the credit to meet a bona fide personal financial emergency. In the interim rule, the CFPB clarified a bona fide personal financial emergency which permits the consumer to use the modification and waiver provisions (subject to the applicable procedures) exists if:
  • The consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency.
  • The consumer's brief statement describing the emergency identifies a financial need due to the COVID-19 pandemic.
  • The emergency necessitates consummating the credit transaction before the end of the applicable waiting period.
Although creditors are not required to inform consumers of the availability of the modification and waiver provisions, the CFPB encourages creditors to voluntarily inform consumers of these options during the COVID-19 pandemic.

Changed Circumstances

Under the TRID rule, creditors must estimate and disclose the costs that consumers will incur in connection with their mortgage transaction. Regulation Z permits creditors to revised estimates of these costs in a limited number of situations, including where there are "changed circumstances" that affect the settlement charges consumers would incur. The definition of "changed circumstances" includes "an extraordinary event beyond the control of any interested party or other unexpected event specific to the consumer or transaction."
In the interpretive rule, the CFPB concludes that the COVID-19 pandemic falls under this definition. Therefore, for purposes of determining good faith, creditors may use revised estimates of settlement charges that consumers would incur in connection with their mortgage transaction if the COVID-19 pandemic has affected the estimate of such settlement charges.
For more information on TRID, see: