The Consumer Financial Protection Bureau (CFPB) has issued a statement advising supervised entities that the bureau encourages them to work with consumers affected by Hurricane Harvey. The CFPB added that it is encouraging entities to “make use of existing regulatory flexibility where doing so would benefit consumers affected by this major disaster.”

“The Consumer Financial Protection Bureau encourages its supervised entities to work with consumers who may be at financial risk due to the major disaster caused by Hurricane Harvey. This event will cause financial strain on consumers and communities,” the advisory stated. “By providing flexibility and other assistance to consumers in communities under such stress, supervised entities can lessen negative impacts and hasten recovery. These efforts may also build goodwill and provide other benefits to the institutions undertaking them. When communities thrive, so do the financial institutions that serve them.”

The 4-page advisory then highlighted what entities can do to assist consumers, provided specific regulatory guidance, detailed its supervisory response and regulatory requirements.

To the extent possible, the CFPB stated, entities should maintain adequate staffing to address consumers’ needs. The CFPB provided a list of actions that it recommends, including:

• Offering penalty-free forbearance or repayment periods with clearly disclosed terms;
• Limiting or waiving fees and charges, including overdraft fees, ATM fees, or late fees;
• Restructuring existing debt by, for example, extending repayment terms with clearly disclosed terms;
• Refinancing existing debt or extending new credit with terms favorable to the consumer (terms could, for example, reduce costs, limit payment amounts or offer consumers other flexibility);
• Easing documentation or credit-extension requirements;
• Increasing capacity for customer service hotlines, particularly those that serve consumers in languages other than English; and/or
• Increasing ATM daily cash withdrawal limits.

The CFPB advised that entities should “make use of existing regulatory flexibility where doing so would benefit consumers affected by a major disaster or emergency” and then provided examples from Regulation B (implementing ECOA), Regulation X (implementing RESPA) and Regulation Z (implementing TILA).

“Regulation B requires creditors to provide applicants for first-lien loans on a dwelling with copies of appraisals, as well as other written valuations, developed in connection with the application promptly upon completion, or three business days prior to consummation of the transaction (for closed-end credit) or account opening (for open-end credit), whichever is earlier,” the advisory stated. “However, the consumer may waive the timing requirement and agree to receive any copy at or before consummation or account opening, except where otherwise prohibited by law. This regulatory flexibility can expedite access to credit secured by a first lien on a dwelling for consumers affected by a major disaster or emergency.”

Regulation X generally requires servicers to obtain a complete loss mitigation application before evaluating a mortgage borrower for a loss mitigation option, such as a loan modification or short sale. Servicers generally may not offer a loss mitigation option based upon an evaluation of any information provided in connection with an incomplete application.

“However, Regulation X permits servicers to offer certain short-term options based upon an evaluation of an incomplete application,” the advisory stated. “In addition, a servicer may offer loss mitigation options to a borrower who has not submitted an application. A servicer also may offer loss mitigation options to a borrower when the offer is not based on any evaluation of information submitted by the borrower in connection with a loss mitigation application.”

The advisory added that “regulatory flexibility permits servicers to offer relief to borrowers affected by a major disaster or emergency without first having to collect a complete application. These borrowers in particular may have difficulty timely obtaining and submitting application documents and information.”

As for Regulation Z, the CFPB stated that regulatory flexibility can help expedite access to credit for consumers facing a bona fide personal financial emergency following a major disaster or emergency.

Regulation Z provides that consumers may waive or modify certain timing requirements when necessary to meet a bona fide personal financial emergency, examples of this include the following:

• Right to rescind. Consumers have at least three business days to rescind certain credit obligations secured by a dwelling. But consumers may modify or waive the right to rescind if the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency.

• Review periods before consummation. With certain exceptions, creditors must generally deliver or place in the mail disclosures associated with the Know Before You Owe mortgage disclosure rule a certain number of days before consummation: no later than the seventh business day before consummation for a Loan Estimate and no later than three business days before consummation for a Closing Disclosure. However, the consumer may modify or waive these waiting periods if the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency.

“The bureau recognizes that supervised entities may themselves experience difficulties due to a major disaster or emergency,” the CFPB stated when addressing its supervisory response. “To that end, when conducting examinations and other supervisory activities, the bureau will consider the circumstances that supervised entities may face following a major disaster and will be sensitive to good-faith efforts to assist consumers.” The bureau recommended that entities send inquiries to [email protected].

Lastly, the bureau warned that the advisory is a non-binding general statement, exempt from the Administrative Procedure Act’s notice-and-comment rulemaking requirements.

“Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. The bureau has determined that this Policy Guidance does not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring Office of Management and Budge approval under the Paperwork Reduction Act, 44 USC 3501, et seq,” the advisory stated.