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CUNA Clarification needed to Fed emergency term
WASHINGTON (2/12/09)—The Federal Reserve Board needs to provide “significant additional” examples to clarify the term “financial emergency” under its proposed revision to Regulation Z mortgage disclosure requirements, according to the Credit Union National Association (CUNA). The Fed’s proposed Reg Z changes implement provisions of the Mortgage Disclosure Improvement Act (MDIA), which was enacted last July and amends certain provisions of the Truth in Lending Act (TILA). Even prior to the 2008 legislation, the Fed had been in the process of reviewing Reg Z mortgage disclosure requirements in their entirety. Significant additional revisions are expected in 2010. The Fed Reg Z proposal would allow a consumer to modify or waive the timing requirements for loan disclosures if requested due to a bona fide personal financial emergency. In a recent comment letter, CUNA urged the Fed to clarify what situations may qualify under this exception. CUNA also urged the agency to limit the term to cover “unusual and unforeseeable circumstances.” Furthermore, CUNA wrote, the burden should be on the borrower to provide an explanation, in writing, of a circumstance that may qualify as a financial emergency to the lender, as opposed to the borrower signing a statement that is prepared by the lender. “We believe these parameters for exercising the ‘financial emergency’ exception are needed to both ensure that the right of cancellation is preserved for the borrower and to protect lenders who may be challenged if they grant a modification or waiver from these timing requirements,” the CUNA letter said. The 2008 The MDIA imposes timing requirements, such as when consumers must receive certain disclosures. For instance, borrowers would have to receive mortgage disclosures at least seven days before a mortgage settlement and receive corrected disclosures, if needed, at least three days before settlement. Use the resource link below to read more of the Fed proposal and the complete CUNA comments.


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