On June 17, 2021 the Federal government designated June 19 as the federal holiday of Juneteenth, which was to be observed June 18, 2021, since Juneteenth fell on a Saturday in 2021. Banks nationwide were left wondering how a new federal holiday might affect their loans already in progress. On August 5, the CFPB published guidance answering banks’ questions about what should have been done back in June about their loans already in progress.
Since 1981 there has been a two-tiered definition of “business day” in Regulation Z, with the goal of providing a more definite and uniform definition of the term “business day.” The two tiers include what is referred to as the general definition of business day which means days on which the bank is open for carrying on substantially all of its business functions (meaning that some banks will count Saturdays at business days, and some will not), and the specific definition of business day, which means all calendar days, except Sundays and federal holidays.
The CFPB’s Juneteenth guidance addresses the specific business day definition as it applies to four TRID requirements and clarifies that the effect will be that the four TRID requirements will be viewed in light of the definition of business day that was in effect when the activity occurred. Because the customer is not negatively affected by receiving more time than the regulation requires, there is no penalty for any banks that treated Saturday, June 19 as a holiday and extended the rescission, delivery or receipt periods by an extra day.
Rescission
Regulation Z provides that for loans secured by a consumer’s principal dwelling, each consumer will have a right to rescind the loan until midnight of the third business day following closing. For those transactions for which the rescission period began on or before June 17, 2021 both Friday, June 18 and Saturday, June 19 were considered business days. Conversely, for those transactions for which the rescission period began after June 17, Friday, June 18 was considered a business day, but Saturday, June 19 was not considered a business day, and was considered a federal holiday.
Mailbox Rule
Regulation Z provides that if a loan estimate or closing disclosure is not delivered in person, the disclosure is considered to be received three business days after it is placed in the mail. For those transactions in which disclosures were placed in the mail on or before June 17, 2021, both Friday, June 18 and Saturday, June 19 were considered business days. If, however, the disclosures were placed in the mail after June 17, Friday, June 18 was considered a business day, but Saturday, June 19 was not considered a business day, and was considered a federal holiday.
Initial Loan Estimate Seven Business Days Prior to Closing
Regulation Z requires that the initial loan estimate be delivered or placed in the mail no later than seven business days before loan closing. For transactions for which the initial loan estimate was delivered or placed in the mail on or before June 17, 2021, both Friday, June 18 and Saturday, June 19 were considered business days. However, for transactions for which the initial loan estimate was delivered or placed in the mail after June 17, Friday, June 18 was considered a business day, but Saturday, June 19 was not considered a business day, and was considered a federal holiday.
Receipt of Revised Loan Estimate (LE) and Closing Disclosure (CD)
Regulation Z requires that any revised LE be received no later than four business days prior to closing, and the initial CD be received no later than three business days before closing. For transactions for which the revised LE or initial CD was provided on or before June 17, 2021, both Friday, June 18 and Saturday, June 19 were considered business days. For transactions for which the revised LE or initial CD was provided after June 17, Friday, June 18 was considered a business day, but Saturday, June 19 was not considered a business day, and was considered a federal holiday.