President Joe Biden signing a bill into law on June 17, 2021, to create Juneteenth National Independence Day so close to the actual legal holiday date has raised questions for lenders and consumers with scheduled loan closings today. The newly created law is also impacting consumers currently in the midst of a right of rescission waiting period.
Under the TILA and Regulation Z, lenders need to comply with certain timing rules regarding the delivery of key disclosures and for rescission. Those time periods hinge on the definition of “business day” for which there is a general definition and a precise definition of the term.
Under the precise definition, a “business day” is “all 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.”
The new law amends 5 U.S.C. 6103(a) to add “Juneteenth National Independence Day, June 19” as a specified legal public holiday. As a result, the new date (June 19) is not a business day under Regulation Z. Because June 19 is a Saturday this year, the holiday will be observed today, June 18, making today a “business day” under the precise definition. The technical result means an extension of the time period for the delivery of key disclosures and for rescission.
Lenders across Wisconsin have loans scheduled for closing today and have loans which require the three-business day right of rescission waiting period to run its course before the bank may allow for loan disbursement.
Until further guidance is issued by CFPB, but based on guidance released late yesterday by the FDIC, WBA believes that banks have discretion to decide whether they will be open today and that if a bank decides to remain open, then loans scheduled for closing and disbursement today may continue as planned since it would be detrimental to the consumers involved in the transactions to postpone the loan closing. For loans that are currently in a rescission period, WBA recommends lenders take the conservative approach and add a day to the rescission period.
WBA also reminds lenders that Regulation Z right of rescission rules provide that “a consumer may modify or waive the right to rescind if the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency. To modify or waive the right, the consumer shall give the creditor a dated written statement that describes the emergency, specifically modifies or waives the right to rescind, and bear the signature of all consumers entitled to rescind.” This may be something to consider if the facts and circumstances warrant, as determined and documented by the consumer.
WBA will update the membership if further instruction regarding TILA is released by CFPB or other regulators.