On June 17, 2021, the President signed legislation that amended 5 U.S.C. 6103(a) to add “Juneteenth National Independence Day, June 19” (Juneteenth) to the list of Federal legal public holidays (Federal holidays). Various regulatory provisions cross-reference or otherwise refer to the Federal holidays listed in 5 U.S.C. 6103(a), including the Regulation Z definition of “business day.” In Regulation Z, “business day” is defined in § 1026.2(a)(6) generally to mean “a day on which the creditor’s offices are open to the public for carrying on substantially all of its business functions.” However, for purposes of certain specified Regulation Z provisions, § 1026.2(a)(6) defines business day to mean: “[A]ll calendar days except Sundays and the 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.” This is referred to herein as the “specific business day” definition.
The legislation that made Juneteenth a Federal holiday took effect immediately. Therefore, June 19 became a Federal holiday on June 17, 2021. By virtue of the cross-reference to 5 U.S.C. 6103(a) in § 1026.2(a)(6), the days that are considered Federal holidays under the specific business day definition in Regulation Z also changed on June 17, 2021. The Consumer Financial Protection Bureau (CFPB) understands that this presented interpretive questions and compliance challenges for the mortgage industry because the Juneteenth holiday occurred only two days after the date of the law change. Based on industry inquiries and outreach to the Bureau following the June 17, 2021 amendment to 5 U.S.C. 6103(a), the CFPB understands these issues were particularly acute for transactions that either (1) closed on or before June 17, 2021 but for which consumers’ rescission periods had not yet expired or (2) were close to the planned closing date on June 17, 2021 and subject to certain disclosure timing requirements of the TRID provisions of Regulation Z.
On August 2, 2021 the CFPB released an interpretive rule to assist the mortgage industry in determining whether to treat June 19, 2021, as a federal holiday or a business day for purposes of compliance with certain time-sensitive borrower protections.
2021
Regulation Z establishes timing requirements, calculated in business days, for when borrowers must receive certain disclosures and when borrowers have the right to cancel some mortgages. Because the Juneteenth National Independence Day Act was signed into law two days before the newly created holiday on June 19, many participants in the mortgage industry reported being unsure of how to treat the day for purposes of regulatory compliance.
For rescission of closed-end mortgages and TILA-RESPA Integrated Disclosures, whether June 19, 2021, counts as a business day or federal holiday depends on when the relevant time period began. If the relevant time period began:
- On or before June 17, 2021, then June 19 was a business day.
- After June 17, 2021, then June 19 was a federal holiday.
Additionally, the interpretive rule explains that creditors are not prohibited from providing longer time periods than required, so if a time period began on, or prior to, June 17, 2021, creditors could still consider June 19, 2021, a federal holiday. Friday, June 18, the day of federal observance for the 2021 Juneteenth holiday, was considered a business day because when a federal holiday falls on a Saturday, the day of federal observance is considered a business day for these time-sensitive consumer protections.
2022
The Juneteenth National Independence Day is always on June 19th. This year the 19th is a Sunday. The CFPB has confirmed that, when a fixed-date holiday falls on Sunday but is observed on Monday, the observed holiday (for example, Independence Day observed on Monday, July 5, 2021, or Juneteenth observed on June 20, 2022) is a business day in cases where the more precise rule applies.
Delivery of Loan Estimate prior to consummation.
Section 1026.19(e)(1)(iii)(B) provides that creditors generally must deliver or place in the mail the Loan Estimate to consumers no later than seven business days before consummation of the transaction. Consistent with the guidance described above, the CFPB concludes that the seven-business-day waiting period in § 1026.19(e)(1)(iii)(B) is determined based on the version of the specific business day definition in effect on the date the creditor delivers the Loan Estimate or places it in the mail. For example, if a creditor delivered or placed the Loan Estimate in the mail on Monday, June 14, 2021, the creditor complied with § 1026.19(e)(1)(iii)(B) if consummation occurred on or after Tuesday, June 22, 2021, because the Loan Estimate was delivered or mailed seven business days (including June 19, 2021) before consummation. The CFPB notes, however, that it would also be compliant for creditors to have considered June 19, 2021, a Federal holiday for purposes of § 1026.19(e)(1)(iii)(B) because creditors may provide the Loan Estimate earlier than seven business days before consummation.
Mailbox rules.
Section 1026.19(e)(1)(iv), (e)(4)(ii), and (f)(1)(iii) provide that if the Loan Estimate or Closing Disclosure, as applicable, is not provided to the consumer in person, the consumer is considered to have received the Loan Estimate or Closing Disclosure three business days after it is delivered or placed in the mail when determining compliance with the disclosure timing requirements in those sections. These are referred to herein as “mailbox rules.” The CFPB concludes that, for purposes of § 1026.19(e)(1)(iv), (e)(4)(ii), and (f)(1)(iii), the three-business-day period is determined based on the version of the specific business day definition in effect on the date the creditor delivers the disclosures or places them in the mail. For example, if a creditor did not provide the Loan Estimate or Closing Disclosure to the consumer in person but delivered or placed it in the mail on Thursday, June 17, 2021, the consumer is considered to have received the Loan Estimate or Closing Disclosure on Monday, June 21, 2021. It would also be compliant for creditors to have considered June 19, 2021, a Federal holiday for purposes of the mailbox rules in § 1026.19(e)(1)(iv), (e)(4)(ii), and (f)(1)(iii).
Receipt of revised Loan Estimate and Closing Disclosure prior to consummation.
Section 1026.19(e)(4)(ii) provides, in part, that the consumer must receive any revised Loan Estimate no later than four business days prior to consummation. Section 1026.19(f)(1)(ii)(A) provides that the creditor must ensure that the consumer receives the Closing Disclosure no later than three business days before consummation. Unlike § 1026.19(e)(1)(iii)(B), the § 1026.19(e)(4)(ii) and (f)(1)(ii)(A) timing requirements begin when the disclosures are received by the consumer and not when they are delivered or placed in the mail. However, as noted above, § 1026.19(e)(4)(ii) and (f)(1)(iii) provide that if the revised Loan Estimate or Closing Disclosure is not provided to the consumer in person, the consumer is considered to have received the revised Loan Estimate or Closing Disclosure three business days after it is delivered or placed in the mail.
Thus, the CFPB concludes that the four- and three-business-day timing requirements in § 1026.19(e)(4)(ii) and (f)(1)(ii)(A), respectively, are determined based on the version of the specific business day definition in effect on the date the creditor either provides the required disclosures to the consumer in person or, if not provided in person, the date the creditor delivers or places the required disclosures in the mail. For example, if a creditor provided the Closing Disclosure to the consumer in person on Thursday, June 17, 2021, the creditor complied with § 1026.19(f)(1)(ii)(A) if consummation occurred on or after Monday, June 21, 2021, because the Closing Disclosure was delivered in person no later than three business days (including June 19, 2021) before consummation. The CFPB notes, however, that it would also be compliant for creditors to have considered June 19, 2021 a Federal holiday for purposes of § 1026.19(e)(4)(ii) and (f)(1)(ii)(A) because creditors may provide the revised Loan Estimate or Closing Disclosure earlier than required.