Whether the new federal holiday of Juneteenth (marked for the first time as a federally observed break this past June) counts as a business day or federal holiday for purposes of mortgage rescissions and disclosures depends on when the relevant time period for the loan began, the federal consumer financial protection agency said in an interpretive rule issued Thursday.
According to the Consumer Financial Protection Bureau (CFPB), if the relevant time period began on or before June 17, then June 19 was a business day. If the period began after June 17, then June 19 was a federal holiday. The timing affects rescission of closed-end mortgages and Truth in Lending Act/Real Estate Settlement Procedures Act (TILA-RESPA) integrated disclosures, the bureau said.
The CFPB also said its interpretive rule explains that creditors are not prohibited from providing longer time periods than required.
For example, the CFPB said, if a time period began on or before June 17, creditors could still consider June 19 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,” the agency stated.
The federal holiday was officially observed June 18 (since June 19 was a Saturday). The holiday became law June 17, the day it was enacted by President Joe Biden’s (D) signature. The holiday went into effect the following day, June 18.
The agency noted that Regulation Z of its mortgage rules 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.
“The mortgage industry can refer to today’s interpretive rule when determining how to treat June 19, 2021,” the CFPB added.
In late June, the CFPB issued a statement that said it was aware that the abrupt holiday observance raised concerns about rescission and disclosure compliance in mortgage closings. The agency vowed to release future guidance that would consider the limited implementation period before the holiday and would be issued after consultation with both federal and state financial institution regulators “to ensure consistency of interpretation for all regulated entities.”