We have a new purchase loan, appraisal came in late and closing needs to happen by Wednesday or they will lose the sale. Can the borrower waive the 3 days closing disclosure timeline? Is this considered a bonafide financial emergency?

Sounds like poor planning rather than a financial emergency.

Bona fide financial emergency has nothing to do at all with the provision for a waiver of the 3-days-before-consummation rule in section 1002.14, And the waiver you hoped for to save the closing date, Nicole, has to be received at least three days before closing anyway.

So if you failed to get the appraisal to the borrower at least three business days before closing and failed to receive a waiver of that requirement at least three business days before closing, but you do the closing anyway, you have a violation.

But I also agree with Randy that this sounds like someone failed to plan adequately.

To be fair, I should also acknowledge that the potential for later problems if you mess up a waiver of the rescission period requirement is much greater than the potential fallout for a violation of the Regulation B section 1002.14 timing requirement. But it is still a violation.

John, I think they were referring to the Closing Disclosure not the appraisal. But now that I reread the OP, I have no idea what they are actually referring too. Not sure why a late appraisal would impact delivering the initial CD.

The OSC to 1026.19(f)(1)(iv) indicates that imminent sale of the existing home at foreclosure if the consumer can't get the loan proceeds before then is "one example" of a bona fide financial emergency. I'd be willing to bet that most consumers would say the potential loss of their earnest money on a home purchase constitutes a bona fide personal financial emergency, irrespective of who/what caused it. As John notes with respect to the appraisal waiver, the potential negative consequences of a violation of this requirement are far less than a violation of the rescission requirement.

"I'd be willing to bet that most consumers would say the potential loss of their earnest money on a home purchase constitutes a bona fide personal financial emergency"

That may be true, but the only person sticking their neck out in a situation like this is the lender. If the lender caused the issue, then they might end up getting themselves sued either way.

Risk-based business decision. I'd bet in most cases the likelihood of getting sued is far greater if the bank doesn't allow the waiver (and the borrower loses their earnest money) than if it does.

If the question was about the three-day waiting period after borrower receipt of the CD, I agree that it may be a business decision, and the risk may be getting sued for causing the borrower financial losses. So maybe once won;t create a problem. But if the lender continues to be sloppy in handling timing requirements and starts offering "bone fide personal financial emergency waivers" as a matter of course rather than real exceptions, examiners will push back and start citing the bank.

The lender needs to be watched to avoid future problems.

I don't disagree with that idea, but other than "late appraisal" (with the unarticulated connection between the lateness of the appraisal and the timing of the CD), we don't know if this was lender sloppiness or something else. (Nor do we know for sure that the borrower would lose their earnest money.)

But even if it was lender sloppiness, the need to clean up that sloppiness so that this doesn't happen again in future transactions would not be a good reason to decline to grant the waiver to this borrower.

I don't guess i understand why lender sloppiness must be the reason for a late appraisal.....maybe the appraiser moved slowly or maybe the turn around time in the area for appraisals is slow. But i would think that that would impact the delivery of the initial CD...i mean, banks don't normally issue CD's for loans that aren't yet approved do they?

Perhaps "sloppiness" was a bad choice of words. I'll back it off to a failure to provide adequate attention to the status of the application, the proposed closing date, and the fact that the appraisal was not yet in hand.