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If we defer both the loan payment and escrow payments for 90 days on a closed end consumer TRID loan, and add the escrow to the loan balance, can we use a Change in Terms Agreement to do so, and does that trigger full disclosure under Reg Z TRID?
If the RE is the borrower’s primary dwelling, does rescission apply? If yes, would it be acceptable to waive rescission automatically due to the severity of this situation, or would we need to prepare the right to cancel, have the borrower sign, then provide a letter requesting a waive due to a bona fine emergency?
You would need to talk to an attorney to determine if you could accomplish this through a change in terms as that is a contractual issue. If the approach you take to accomplish the deferment does not qualify as a refinancing under 1026.20 then new disclosures would not be required; if it does meet the criteria for a refinancing under 1026.20 it would be treated as a new transaction with full disclosures.
As for rescission, since you would be adding to the loan balance/increasing the security interest in their home I would say this would be rescindable. You would need to provide the rescission disclosures before the customer could waive their right to rescind so they know their rights and what they are waiving. Reg Z says, “[t]o modify or waive the right, the consumer shall give the creditor a dated written statement that describes the emergency, specifically modifies or waives the right to rescind, and bears the signature of all the consumers entitled to rescind. Printed forms for this purpose are prohibited.”
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