WASHINGTON - If the Federal Reserve Board had anything to say about it, borrowers would be more free to waive their "right of rescission."
And now the Fed may get its say.
The Senate version of the regulatory relief package would eliminate the requirement that borrowers have a "bona fide personal financial emergency" before waiving their right to rescind. The bill would instead let the Federal Reserve Board decide requirements for waiver.
The Fed in March indicated its support for more flexible stipulations. If the waiver provision in the Senate package becomes law, it is expected the Fed would ease requirements.
The Senate bill is on hold until the House version meets its fate. If the House bill, which has already cleared the Banking Committee, makes it across the Capitol, the Senate's waiver provision would probably be added.
Lenders are all for letting more people waive their right to back out of certain mortgage loans within three days. Some say consumers should be too.
"Permitting the borrower to waive the right of rescission in appropriate circumstances gives them quicker access to funds," wrote Richard L. Mount, president of the Independent Bankers Association of America, in a letter to the Fed's Consumer Advisory Council.
But there is concern, says Michael Ferry, a lawyer in St. Louis who serves on the Fed council.
"It runs the danger of becoming boilerplate ... people waiving their right without really knowing what they're doing."
Mr. Ferry said legislation on waivers should include a provision allowing the waivers to be voided in cases where lenders make errors in required disclosures.
Errors in violation of the Truth-in-Lending Act extend a borrower's right to rescind to three years. Mr. Ferry said consumers should not waive that right. But if all disclosures are correct, it may be acceptable to waive the initial three-day delay, he said.