CFPB Issues Juneteenth Guidance
The CFPB recently published an interpretive rule that attempts to provide guidance on the impact of the Juneteenth holiday on certain 2021 transactions around the time of that legislation, specifically those implicating Regulation Z’s right of rescission for covered closed-end transactions and certain TRID disclosures. June 19th became a holiday as of June 17, 2021, when President Biden signed legislation that added “Juneteenth National Independence Day, June 19” to the list of federal holidays in 5 U.S.C. § 6103(a). The change impacted regulations that cross reference this list of federal holidays, including the definition of a “business day” under Regulation Z, and the regulatory requirements that use such definition.
As explained in WBK’s previous coverage of the change, TILA and Regulation Z recognize two different definitions of “business day,” each of which are applied differently depending on the related requirements. A “general business day” is a day on which the creditor’s offices are open to the public for carrying on substantially all of its business functions. Meanwhile, a “specific business day” is defined to mean all calendar days except Sundays and the legal public holidays specified in 5 U.S.C. § 6103(a).
In the new guidance, the CFPB explains that June 19th became a federal holiday, including for purposes of the “specific business day” definition in Regulation Z, as of June 17, 2021, and stated that “[t]he Bureau 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.” The CFPB noted that this particularly affected transactions that closed on or before June 17, 2021, but where the rescission period had not yet expired, or were close to a closing date as of June 17 and subject to certain disclosure timing periods under TRID.
The guidance provides that “the version of the specific business day definition that applies to these provisions is the version of the definition in effect when the relevant time period begins.” Therefore, if the relevant time period under Regulation Z/TRID began on or before June 17, 2021, then June 19, 2021, is considered a business day under the “specific business day” definition. However, if the relevant time period began any time after June 17, 2021, then June 19, 2021, is considered a federal holiday included in the “specific business day” definition. The guidance also notes that creditors would not be prohibited from providing a longer time period, or considering June 19, 2021, to be a federal holiday, even if the relevant time period began on or before June 17, 2021.
The interpretive rule also specifically identifies and provides examples of how the guidance applies to certain Regulation Z and TRID requirements, e.g.:
- Right of Rescission: The guidance provides that, with regard to the notice of the right to rescind for covered closed-end transactions, “the rescission period expiration date disclosed on the notice of the right to rescind is determined based on the version of the specific business day definition in effect when the rescission period begins.”
- Delivery of Loan Estimate Before Consummation: The guidance provides that the TRID Loan Estimate seven-business-day waiting period “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.”
- Mailbox Rules: The guidance provides that, for the TRID “mailbox rule” timing, the relevant three-business-day period before a consumer is considered to have received the Loan Estimate or Closing Disclosure “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.”
- Receipt Before Consummation of Revised Loan Estimate, Closing Disclosure: The guidance provides that, for the TRID requirements that a consumer receive a revised Loan Estimate no later than four business days before consummation and the Closing Disclosure no later than three business days before consummation, the timing requirement is “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.”
The interpretive rule is considered effective on its publication in the Federal Register, which occurred on August 12, 2021. The CFPB’s press release discussing this interpretive rule can be found here.
