Customer wants to waive ROR based on financial emergency. The emergeny is that they need the money to travel to funeral and also to bury "Aunt Suzi."

Would this qualify as a bona-fide financial emergency?

I'd say no.

I think it might. Obviously, you can't wait to bury someone, and travel expenses are not really something you can put off. You might could wait to pay the funeral home, though.

If you decide to let the customer waive the ROR, be sure that they write out their waiver in their own hand (you can't have it written out for them to sign - they have to write it).

Since the bank is ultimately responsible for determining if it is a bona fide financial emergency, they need to do a little investigating and document it. As you stated, the funeral home may be willing to wait for their money so shouldn't someone contact them to see what they need from the bank or have the customer provide documentation saying what the consequences are of not having the money today? As for travel expense, what if it was travel to a wedding instead of a funeral - would you consider that a bona-fide emergency? While it would be nice to attend the funeral, what are the consequences of not attending?

I understand that the bank's decision to allow (or disallow) the waiver will be scrutinized by the regulators and/or a Court of Law, but 226.23(e)(1) says,

"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...."

A wedding is much different than a funeral. Presumably, you could plan to attend a wedding as they're not typically spur of the moment things. A person's death, however, is not usually that predictable.

I guess it's a matter of opnion, but I would think that there's at least some risk involved in denying the customer's request for waiver because the bank didn't think attending a funeral was a good enough financial hardship.

As callus as it may seem, attending a funeral is not IMO a bona fide financial emergency for the purpose of waiving the ROR. Also, it has been my experience that the funeral home will not demand payment up front if life insurance is in place or if you have arranged other means to pay them, so again I would not consider that an emergency either unless, as CB Fan suggested you contact the funeral home and verify they are demanding payment up front.

The ROR is not to be taken lightly simply because you feel sympathy for the borrower.

From the commentary: "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." That's why I would stress that the original poster needs to delve into this a bit a further before making a decision rather than relying on the applicant's stated purpose.

Post deleted by Tom@BBCON

Dan, I am sorry to hear about your loss. I never wanted anyone to take my comment personally.

Tom, thank you. Considering the topic the comment just struck a nerve and I apologize for my brashness (for a lack of a better term). I should have exercised more self control. I know you didn't mean it personally.

Is there anywhere showing a list of examples of what constitutes a bona fide financial emergency? I have just got on an officer's case for accepting an inadequate waiver letter. The letter just states "I have a financial emergency and waive my right to rescind", but from the file it looks like she only wanted to get the funds to buy the car now and not wait, which in my opinion, in not an emergency. But I know I am going to get questioned by the loan officer as to when they can except a waiver. I could not find anything in the FDIC Statements of Policy or General Counsel's Opinions.

I was told in training one time that unless the customer (or a family member) was bleeding on the floor and the doctor only took cash, there is never a good reason to rescind.

That being said, there is nothing definitive in the regulation. I have accepted 2 reasons in my 12 years as a compliance officer. The first was so a man could put his daughter in a clinic for anorexia, and the second was for an individual who had raw sewage backing up into their basement. I considered both of those bona fide financial emergency.

What you might tell your lender is that even though the customer waived their right, if in essence they didn't have a bona fide financial emergency, they could come back and rescind at a later point. I've never heard this of happening, but it states so (in legal terms) in the regulation.

Thanx Skittles. That is what I told him, about the person being able to come back and rescind the transaction.

I could see a bona fide emergency being something to save the home from being ruined, like a damaged roof and rain was forecasted. Or emergency medical procedures, that kind of thing. Car stuff doesn't strike me as emergencies, unless maybe the person's job was at risk without one.

This particular situation was that the car dealer was offering a great price, but would not hold it for three days. Whoopee, so she has to pay a higher price for the car. Not an emergency.

This is obviously a sensitive topic. It's also very judge mental. Just my 2¢ FWIW, I think this IS a legitimate reason to waive the RofR.

Also, in my 15 years of being an examiner and a consultant (currently representing over 500 client financial institutions), I've not seen a bank criticized for waiving a RofR when it is something serious like a funeral (I think I remember 2 like this, although I honestly don't remember the details). I have seen criticism for silly reasons (going out of town, stock prices, late tax return).

I think this type of issue can ruin a compliance officers reputation with their lenders as well. I'd let this one go with good documentation. It's definitely a customer service issue but can also be a sound compliance management issue.

However, with all of that said, each bank has to make their own risk decision on this one.

Have a great weekend everyone. I'm going fishing!

A agree with David. I would also let this one fund with good documentation in file. I would also get it signed by management to support by descision in this gray area.

Getting a loan for a new roof today because another storm is coming in is an example I often use.

Trying to get cash for a vacation the borrower is leaving on tomorrow is not a good reason. That is their poor planning.

And I think planning would be a big part of what would pass the smell test. A funeral isn't planned well in advance (in most cases), nor is a weather related repair or one necessary to a home that is "in danger." A vacation or tax payment should be planned for.