The CFPB to The Rescue!

May 1, 2020 at 8:34 am Leave a comment

Considering I believe the world would be a marginally better place had the CFPB never been created, I’ve had a tough time this morning thinking of any action taken by the Bureau with which I am more pleased.

What I am referring to is this interpretive ruling issued by the Bureau emphasizing that a borrower suffering an economic impact resulting from the COVID-19 pandemic can waive mandatory waiting periods before mortgage closings. In addition, the Bureau has given lenders more flexibility to send out updated Loan Estimates without running afoul of the regulations. Commonsense has prevailed.

Under the TRID rule creditors must deliver Loan Estimates to consumers no less than seven (7) days before consummation and consumers must receive Closing Disclosures at least three (3) business days before closing. For these time periods to be waived, a consumer must have a bonafide emergency.

The CFPB takes this rule seriously. It means, for example, that a member who wants to expedite a closing to go to the Bahamas is out of luck. The CFPB guidance should give lenders greater confidence in expediting closings so long as the member is being impacted by COVID-19. This flexibility also applies to the three (3) day Right Of Rescission.

The Dodd-Frank mandated regulations also placed strict limits on when lenders can send out amended Loan Estimates. Remember that regulators wanted to cut down on bait-and-switch tactics. Under existing regulations however, lenders can provide an amended Loan Estimate when closing costs are impacted by an extraordinary event, such as a war or natural disaster. According to the CFPB, the economic disruption caused by COVID-19 constitutes such an event. As a result “for the purposes of determining good faith, creditors may use the revised estimates of settlement charges that consumers would incur in connection with the mortgage transaction if the COVID-19 pandemic has affected the estimate of such charges”. Who knew that quarantines could have such benefits?

Entry filed under: Compliance, COVID-19, Economy, Economy (?), Mortgage Lending. Tags: , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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