On June 17, the president signed legislation designating “Juneteenth National Independence Day, June 19” as a federal holiday. Because the legislation took effect immediately, it raised compliance questions for residential mortgage lenders, which must take federal holidays into account when calculating waiting periods for rescissions of closed-end loans under the Truth in Lending Act (TILA) and disclosures under the TILA-RESPA Integrated Disclosure (TRID) rule. To further complicate the situation, June 19 fell on a Saturday and, therefore, was observed on June 18.
In response, the Consumer Financial Protection Bureau (CFPB) issued an interpretive rule on August 5 to “assist the mortgage industry in determining whether to treat June 19, 2021, as a federal holiday or a business day for purposes of compliance with certain time-sensitive borrower protections.” The interpretive rule clarifies that lenders did not need to treat June 19 as a federal holiday if the relevant time period began on or before June 17. The interpretive rule further notes that “nothing prohibits creditors from providing longer time periods,” and therefore, they could have treated June 19 as a federal holiday for such a time period. If the relevant time period began after June 17, the interpretive rule states that lenders should have treated June 19 as a federal holiday.
In a statement issued the day after designating June 19 as a federal holiday, Acting Director Dave Uejio stated that “[t]he CFPB understands that some lenders may delay closings to accommodate the reissuance of disclosures adjusted for the new Federal holiday. The CFPB notes that the TILA and TRID requirements generally protect creditors from liability for bona fide errors and permit redisclosure after closing to correct errors.” While it appears that the CFPB will not take issue with lenders that adjusted time periods beginning on or before June 17, it’s clear that lenders will need to show that all relevant time periods that began after June 17 accounted for the new holiday to show compliance with TILA and TRID.
We will continue to monitor this topic for additional developments.