Summary: Application of TILA-RESPA (TRID) Integrated Disclosure Rule and Regulation Z Right of Rescission Rules during COVID-19 Pandemic
12 CFR Part 1026
The Consumer Financial Protection Bureau (CFPB)
Prepared by the Legislative and Regulatory Affairs Department
The Consumer Financial Protection Bureau (CFPB) is issuing this interpretive rule to provide guidance to creditors and other covered persons involved in the mortgage origination process.
The interpretative rule became effective on May 4, 2020 and can be accessed here.
The Bureau has received several questions and requests for clarification from stakeholders about the application of certain provisions of the TILA-RESPA (TRID) Integrated Disclosure Rule and Regulation Z’s right to rescission rules in light of the COVID 19 epidemic. The Bureau issued this interpretive rule to address possible temporary business disruptions and challenges for covered persons that are involved in the mortgage origination process, including creditors, loan originators, settlement agents and other parties such as real estate appraisers.
TRID imposes certain disclosure requirements and waiting periods related to mortgage transactions and Regulation Z rescission rules provide consumers with the right to rescind certain credit transactions secured by their principal dwelling. In addition, the Regulation Z rescission rules also impose certain waiting periods. Under both the TRID rule and the Regulation Z rescission rules, a consumer may modify or waive the applicable waiting period, after receiving required disclosures, if the consumer determines that he/she needs credit extended to meet a bona fide personal financial emergency due to the COVID-19 pandemic. For the waiting periods to be modified or waived, the creditor must have a dated written statement by the consumer specifying: (i) a description of the emergency; (ii) a request to modify/waive the waiting period; and (iii) bearing the signature of the consumer(s) primarily liable on note.
TRID also requires creditors to provide a good faith estimate of costs consumers will incur in connection with their mortgage transaction. TRID permits creditors to use revised estimates of such costs under certain circumstances such a when there are “changed circumstances.” The Bureau clarifies that the COVID-19 pandemic is the type of extraordinary event that will affect the ability of stakeholders to provide consumers with accurate estimates of consumer costs. As such, for purposes of determining “good faith,” creditors may use revised estimates of settlement charges that consumer would incur in connection with the mortgage transaction if the COVID 19 pandemic has affected the estimate of such settlement charges.