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Can COVID issues be used as a personal emergency to waive waiting periods?

May issues related to the COVID-19 crisis be used by a consumer as a bona fide personal emergency for waiving the waiting periods required under Regulation Z for the integrated Truth in Lending disclosures and the right to rescind?

Yes. The Consumer Financial Protection Bureau issued an interpretive rule “clarifying that (1) if a consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency, (2) the consumer’s brief statement describing the emergency identifies a financial need that is due to the COVID-19 pandemic, and (3) the emergency necessitates consummating the credit transaction before the end of an applicable TRID Rule waiting period or must be met before the end of the Regulation Z Rescission Rules waiting period, then the consumer has a bona fide personal financial emergency that would permit the consumer to utilize the modification and waiver provisions, subject to the applicable procedures set forth in the TRID Rule and the Regulation Z Rescission Rules.”

It is worth noting that if a bank is selling the mortgage to an investor, investor guidelines may prevent sale of the loan if any waiver(s) are utilized in the transaction. (June 2020)

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