On June 17, 2021, President Joe Biden signed into law Juneteenth National Independence Day Act. The enactment of the new Federal holiday was an historic and welcome national event. Yet, the legislation making June 19 a Federal holiday—observed this year by the Federal government on Friday, June 18—was passed swiftly and resulted in unintended disruption in the residential mortgage lending industry. The holiday impacted the timing of certain requirements based on “business days” under the Truth in Lending act (TILA) and Regulation Z.
Under the TILA the Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure Rule (TRID), a creditor is generally responsible for delivering or placing in the mail the required loan estimate no later than the third business day after receiving the consumer’s application. The consumer must also receive the closing disclosure at least three business days before consummation of the transaction. Regulation Z also allows the consumer, for certain refinancings, to rescind the transaction within three business days after consummation.
TILA and Regulation Z contain two definitions of “business day” for different purposes. For purposes of providing the loan estimate, a business day is defined as “a day on which the creditor’s offices are open to the public for carrying on substantially or all of its business functions.” There is also a specific definition of the term “business day” for other purposes, such as calculating days to ensure the consumer timely received the closing disclosure and the consumer’s right to rescind. For these purposes, “business day” is defined as “all calendar days except Sundays and legal public holidays specified in 5 U.S.C. § 6103(a), such as New Year’s Day, the Birthday of Martin Luther King, Jr., Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.” The Juneteenth National Independence Day Act amends 5 U.S.C. 6103(a) to add “Juneteenth National Independence Day, June 19” as a specified legal public holiday.
After the legislation was passed, industry groups including the Mortgage Bankers Association and American Bankers Association requested urgent guidance from the Consumer Financial Protection Bureau (CFPB) and other banking regulators to address the disruptions caused by requiring the legal observance of a public holiday with no advance notice.
The CFPB issued a statement late in the day on June 18, 2021. CFPB Acting Director Dave Uejio addressed the industry’s concerns about the implementation of the new Federal holiday, particularly as it related to mortgage lender compliance with TILA and TRID timing requirements. “The CFPB recognizes that some lenders did not have sufficient time after the Federal holiday declaration to consider whether and how to adjust closing timelines. The CFPB understands that some lenders may delay closings to accommodate the reissuance of disclosures adjusted for the new Federal holiday.” Uejio also noted that “the TILA and TRID requirements generally protect creditors from liability for bona fide errors and permit redisclosure after closing to correct errors.” The CFPB signaled that it may issue additional guidance, as Uejio stated that “[a]ny additional guidance ultimately issued by the CFPB would take into account the limited implementation period before the holiday and would be issued after consultation with the other FIRREA regulators and the Conference of State Bank Supervisors (CSBS) to ensure consistency of interpretation for all regulated entities.”
The CFPB’s statement did not address litigation risks and recession rights, two important issues to the mortgage industry. LenderLaw Watch will continue to monitor for any additional guidance from the CFPB on this issue.