President Joe Biden signed the bill on June 17, 2021 National Independence Day Law in June. The passing of the new federal holiday was a historic and welcome national event. Still, the legislation that made June 19 a federal holiday – followed this year by the federal government on Friday June 18 – was swiftly passed and unintentionally disrupted the residential mortgage lending industry. The holiday affected the timing of certain requirements based on “business days” under the Truth in Lending Act (TILA) and Regulation Z.
According to TILA, the Integrated Disclosure Rule (TRID) of the Real Estate Settlement Procedures Act (RESPA), a creditor is usually responsible for delivering the required credit estimate no later than the third working day after receipt of the consumer’s application or mailing it. The consumer must also receive the completion notification at least three working days before the transaction is completed. Regulation Z also enables the consumer to withdraw from the transaction within three working days of certain refinancing.
TILA and Regulation Z contain two definitions of “Business day“For different purposes. For the provision of the credit estimate, a business day is defined as “a day on which the obligee’s offices are open to the public for the performance of essential or all of his business functions”. There is also a specific definition of the term “business day” for other purposes, such as: B. the calculation of days to ensure that the consumer receives the closing report in good time and that the consumer has the right of withdrawal. For these purposes, “business day” is defined as “all calendar days other than Sundays and public holidays under 5 USC Section 6103 (a) such as New Year’s Day, Martin Luther King Jr.’s Birthday, Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day. ”The June National Independence Day Act amends 5 USC 6103 (a) to add“ National Independence Day June 19, June 19 ”as the specified public holiday.
Following the passage of the law, industry groups including the Mortgage Bankers Association and American Bankers Association, the Consumer Financial Protection Bureau (CFPB) and other banking regulators urged guidance to address the disruption caused by legal observance of a holiday without an advance payment will note.
The CFPB gave a statement on the late evening of June 18, 2021. Acting director of the CFPB, Dave Uejio, raised industry concerns about the implementation of the new federal holiday, particularly regarding mortgage lenders’ compliance with the TILA and TRID timelines. “The CFPB recognizes that after the holiday declaration, some lenders have not had enough time to consider whether and how the closing dates can be adjusted. The CFPB understands that some lenders may delay the shutdown to accommodate the reissue of disclosures in line with the new federal holiday. Uejio also noted that “the TILA and TRID requirements generally protect creditors from liability for bona fide errors and allow re-disclosure after close to correct errors.” The CFPB signaled that it could potentially issue additional guidance, da Uejio stated that “[a]Any additional guidance ultimately issued by the CFPB would take into account the limited implementation period prior to the holiday and would be issued after consultation with the other FIRREA regulators and the Conference of State Banking Supervisors (CSBS) to ensure a consistent interpretation for all supervised entities. ”
The CFPB statement failed to address litigation risks and recession rights, two important issues for the mortgage industry. LenderLaw Watch will continue to look for further guidance from the CFPB on this matter.