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Categories: Home-Secured Lending

CFPB Issues Statement Addressing Juneteenth Confusion

As we’ve blogged about previously, Juneteenth (officially known as “Juneteenth National Independence Day”), which is celebrated every year on June 19th, became an official federal holiday when President Biden signed legislation on June 17, 2021, adding Juneteenth to the list of federal holidays found in 5 U.S.C. 6103(a). This change occurred on fairly short notice – the law was signed just two days before the holiday itself would be celebrated in 2021 – and resulted in confusion among compliance professionals regarding whether June 19, 2021 should be treated as a federal holiday when complying with federal laws and regulations. Last week the CFPB issued an Interpretive Rule addressing this issue.

For some context, Regulation Z imposes certain deadlines, which are often measured in business days (as opposed to calendar days). Section 1026.2(a)(6) defines “business day”, and actually provides two different definitions for the term. The first definition merely defines “business day” as any day on which the credit union’s offices are “open to the public for carrying on substantially all of its business functions.” The second definition only applies to specific deadlines laid out in Regulation Z – including some deadlines that are important for closed-end mortgage transactions – and defines “business day” to mean “all calendar days except Sundays and the legal public holidays specified in 5 U.S.C. 6103(a).” Thus, under this definition (referred to by the CFPB as the “specific definition”), all Saturdays are considered business days even if a credit union’s offices are closed, unless that Saturday happens to be a legal public holiday.

The CFPB statement notes that the legislation signed on June 17, 2021 specifically added Juneteenth to the list of “legal public holidays,” meaning that the “specific” definition of “business day” will exclude June 19th of each year from the business day calculation, as it already does for July 4th and other federal holidays. While that is helpful moving forward, the bureau acknowledged that there were many questions regarding how this holiday should be treated for mortgage transactions that occurred around Juneteenth 2021. To that end, the CFPB Interpretive Ruling states:

“Regulation Z does not specify which version of the specific business day definition applies to these provisions when the definition changes during the relevant time period—the version of the definition in effect when the relevant time period begins, or the new version of the definition that takes effect before the relevant time period ends. The Bureau is issuing this interpretive rule to clarify 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.  Accordingly, in the context of the 2021 Juneteenth Federal holiday and the affected closed-end rescission and TRID provisions, if the relevant time period began on or before June 17, 2021, then June 19, 2021 is a business day for purposes of the specific business day definition. If the relevant time period began after June 17, 2021, then June 19, 2021 is a Federal holiday for purposes of the specific business day definition.”

(emphasis added; internal footnotes omitted).

Thus, whether June 19th, 2021 should have been treated as a federal holiday for purposes of applying the “specific definition” of “business day” will depend on when the counting of business days began. The interpretive ruling discusses how this would apply to the 3-business-day rescission period for a closed-end mortgage loan:

“For example, assume the rescission period began on Wednesday, June 16, 2021. Consistent with the version of the specific business day definition in effect when the rescission period began, the creditor disclosed June 19, 2021, as the rescission period expiration date on the notice of the right to rescind. Because the rescission period began on or before June 17, 2021, Saturday, June 19, 2021 is a business day for purposes of determining the rescission period and the disclosed rescission period expiration date.”

(emphasis added).

The interpretive ruling points out that it only applies to certain provisions relating to certain TRID deadlines, including the rescission of closed-end mortgages (see the table below), and does not address other portions of Regulation Z that rely on the specific definition. Additionally, the Bureau states:

“The Bureau notes that the affected closed-end rescission and TRID provisions do not prohibit creditors from providing longer time periods. Therefore, as discussed further below, it would also be compliant for creditors to have considered June 19, 2021 a Federal holiday for purposes of these provisions.”

(emphasis added). Thus, the Bureau has stated credit unions that chose to treat June 19, 2021 as a federal holiday are compliant.

According to Footnote 5 of the Interpretive Ruling, this approach to June 19, 2021 applies to the deadlines contained in the following provisions:

Regulation Z Provision

Topic

Deadline

Section 1026.19(e)(1)(iii)(B) and (iv); Section 1026.19(e)(2)(i)(A);

Delivery of the Loan Estimate

3 business days after triggering event

Section 1026.19(e)(4)(ii)

Delivery of a Revised Loan Estimate

4 business days prior to consummation

Section 1026.19(f)(1)(ii) and (iii)

Delivery of the Closing Disclosure

3 business days prior to consummation

Section 1026.23(a)(3)(i) and section 1026.23(b)(1)(v)

Consumer’s right to rescind

Midnight on the 3rd business day following consummation

About the Author

Nick St. John, NCCO, NCBSO, Regulatory Compliance Counsel, NAFCU

Nick St. John, Regulatory Compliance Counsel, NAFCUNick St. John, was named regulatory compliance counsel in March 2020. In this role, Nick helps credit unions with a variety of compliance issues.

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