NEWS: Yesterday, President Biden signed legislation making June 19 – known as Juneteenth – a federal holiday. It marks the date in 1865 when hundreds of thousands of enslaved men and women in Texas finally learned they had been freed after the end of the Civil War.
This year, since Juneteenth falls on a Saturday, the federal government is observing the holiday today, Friday June 18.
The addition of a new federal holiday has important compliance implications for credit unions and other mortgage lenders nationwide.
TRID and rescission implications
Juneteenth creates at least two significant timing consequences for mortgage lenders.
Under TRID, creditors are generally responsible for delivering or mailing the Loan Estimate no later than the third business day after receiving the consumer’s application. They must also ensure that the consumer receives the Closing Disclosure at least three business days before consummation of the transaction. For details, see The League’s ii Release No. B079 – TILA-RESPA Integrated Disclosure Rule.
In addition, for certain refinancings, Reg. Z lets a consumer rescind (cancel) the loan within three business days after consummation. Loan proceeds may not be disbursed until the three business days expire and the credit union has assured itself that the consumer(s) have not cancelled the transaction. For details, see The League’s ii Release No. B036 – Reg. Z – Right of Rescission.
What’s a “business day”? The answer depends.
- For purposes of the Loan Estimate timing rule, “business day” means “a day on which the creditor’s offices are open to the public for carrying on substantially all of its business functions. Thus, whether Juneteenth is a “business day” for Loan Estimate purposes depends on whether the lender’s offices are open.
- For purposes of both the Closing Disclosure timing rule and the rescission days calculation, a stricter definition of business day applies: “Business day” means 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 – and now Juneteenth. The Juneteenth bill amended 5 U.S.C. 6103(a) to add “Juneteenth National Independence Day, June 19” as a specified legal public holiday.
Nationally known law firm Alston & Bird offers this summary of what that all means:
Notably, Comment 2(a)(6)-2 of the official staff commentary to Regulation Z indicates that when one of the federal holidays (July 4, for example) falls on a Saturday, federal offices and other entities might observe the holiday on the preceding Friday (July 3). In these cases, the observed holiday (in the example, July 3) is a business day. Following that logic, the observed Juneteenth holiday (Friday, June 18) is a “business day” and the actual stated holiday (Saturday, June 19) is the “holiday” for purposes of the [Closing Disclosure] and right of rescission waiting periods. …
For residential mortgage transactions that are anticipated to close in the next few days, it is essential that creditors treat the actual Juneteenth holiday (June 19) as a federal holiday for purposes of the timing requirements of providing the CD (with the observed holiday of Friday, June 18 being treated as a “business day”) and allowing sufficient time to elapse for the borrower’s right to rescind the transaction. Further, documentation such as the Notice of Right to Cancel may need to be redated to take account of the new holiday.
Effective date
When does all of this change take effect? At least one national law firm has observed: “The language [in the new legislation] does not specify an effective date, so it should be presumed that it is effective upon President Biden’s signature,” which was yesterday.
This would mean that credit unions and other lenders should start taking Juneteenth into their TRID and rescission calculations now; however, whether it will affect the rescission period for loans closed earlier this week (before the signing of the law) has not been addressed by regulators.
Office closings
Financial markets and Federal Reserve Financial Services will operate normally today, but many other federal and state government offices are closed. It’s been widely reported that all federal employees have the day off, including federal courts. The U.S. Postal Service (USPS) has said that it will remain open for ordinary Friday mail delivery this year, but will discuss future recognition of the holiday.
In addition, some credit unions around the country will observe Juneteenth today. For example, Navy Federal Credit Union announced that it will close offices early today. Most banking regulators have not yet issued guidance on financial institutions closing for the holiday; however, the FDIC issued a statement to say that: “When determining their operating status [Friday], FDIC-supervised institutions should comply with applicable requirements of their state chartering authority and consider the impact on customers.”