Can anyone tell me quickly where "bona fide" financial emergency is defined with regard to rescission? I thought the langauge that gave examples of the furnace needing repair in the winter (etc.) was in the commentary to reg z but I can't seem to put my hands on it now. Thanks!

Sorry - it's not defined.

A good rule of thumb is to use the life and death rule - which basically rules every "emergency" out.

Poor planning is definitely not an emergency and that's what most of the "emergencies" boiled down too.

OK, I'm trying to argue that point against a local attorney who doesn't seem to know (or won't conceed to) the difference. Thanks for your help

I'm with you 1runr. My training 12+ years ago mentioned a bonafide emergency like a hole in the roof that needed fixed prior to a storm coming. If the roof didn't get fixed immediately there would be larger financial issues to deal with. I also remember that the document had to be handwritten by the customer and not just signing a previously typed document explaining the bonafide emergency. It has admittedly been a while since I have seen this and cannot direct you to the right area. If things have changed recently about life and death scenarios, I have not been exposed to that.

Fixing a roof because a storm is coming - fixing a furnace because it is 15 below - forestalling foreclosure on the house - all are "life and death" issues.

Not being able to close on the guys new condo because he needs the money today, even though they knew weeks ago that the closing was today - is not an emergency.

From Regulation Z, Section 226.23(e):

e) Consumer's waiver of right to rescind. (1) The consumer 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. To 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, except as provided in paragraph (e)(2) of this section.
(2) The need of the consumer to obtain funds immediately shall be regarded as a bona fide personal financial emergency provided that the dwelling securing the extension of credit is located in an area declared during June through September 1993, pursuant to 42 U.S.C. 5170, to be a major disaster area because of severe storms and flooding in the Midwest. In this instance, creditors may use printed forms for the consumer to waive the right to rescind. This exemption to paragraph (e)(1) of this section shall expire one year from the date an area was declared a major disaster.

From the Official Staff Commentary to this section:

23(e) Consumer's waiver of right to rescind.

1. Need for waiver. To waive the right to rescind, the consumer
must have a bona fide personal financial emergency that must be
met before the end of the rescission period. The existence of the
consumer's waiver will not, of itself, automatically insulate the
creditor from liability for failing to provide the right of
rescission.

2. Procedure. To waive or modify the right to rescind, the
consumer must give a written statement that specifically waives or
modifies the right, and also includes a brief description of the
emergency. Each consumer entitled to rescind must sign the waiver
statement. In a transaction involving multiple consumers, such as
a husband and wife using their home as collateral, the waiver must
bear the signatures of both spouses.

As I read it, the only clarification of "bona fide personal financial emergency" given by the regulation is the phrase in the commentary "that must be met before the end of the rescission period." That goes to the timing of the emergency, but says nothing about the nature of the emergency.

What a person who wants his or her money ASAP may regard as a BFPF emergency, and what the lender who is trying to satisfy both the customer and the regulators may regard as a BFPF emergency, and what an examiner 18 months or so removed from the situation may regard as a BFPF emergency, may very well be three different things.

Steve: You're the Man!!

Is anyone aware of any cases (perhaps your own bank) where a court said you should not have allowed the customer to claim a bona fide financial emergency, thus a bank was left holding the bill?

I'm sure if you Google (or go to BOLs Court Watch) on right of rescission or right to cancel you will find some court references. I have heard of court rulings in favor of the borrower due to improperly giving the ROR, but know of no specific case in relation to the waiver of the ROR.

As I and others have said before - Poor planning on your part does not constitute an emergency on mine.

If I place a $250,000 deposit on a property that I must arrange financing for within 2 days or lose the property and the deposit does not constitute a bona fide financial emergency to waive the ROR. That's just stupidity on my part.