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CFPB Issues Interpretive Rule for Juneteenth Holiday

The CFPB recently issued an interpretive rule for the recently added Juneteenth federal holiday.  The rule provides guidance on the holiday’s impact to certain timing requirements under Regulation Z.  Juneteenth was added as a federal public holiday by a bill signed into law by President Biden on June 17th of this year.  The short timeframe between when the bill was introduced and signed into law left some in the industry scrambling to determine its immediate impact on mortgage timing requirements.

DocMagic’s article on the change at the time discussed these impacts.  The addition of Juneteenth as a federal holiday (added to 5 U.S.C. 6103(a)) modified Regulation Z’s “specific” business day rule which impacted various timing situations, including but not limited to:

  • Rescission for both closed- and open-end transactions (Reg Z sections 1026.15 and 1026.23)
  • 3-day waiting period for review of the Closing Disclosure before consummation (1026.19(f)(1)(ii))
  • 7-day waiting period for the first available closing date after initial disclosures are issued (1026.19(e)(1)(iii)(B))
  • 4-day period by which a Loan Estimate may last be provided before consummation (1026.19(e)(4)(ii))
  • 3-day “mailbox rule” allowing presumption of receipt after mailing (1026.19(e)(1)(iv) and 1026.19(f)(1)(iii))

The CFPB’s recently published guidance indicates it is applicable to closed-end transactions; however, the business day definition at 12 C.F.R. 1026.2(a)(6), which was modified by the addition of the Juneteenth holiday, applies to both open- and closed-end transactions.  The guidance indicates applications of the specific business day rule outside of closed-end credit are outside of the scope of this guidance.

The CFPB guidance largely focuses on the effect of Juneteenth on rescission under 12 CFR 1026.23.  The guidance indicates the effect of Juneteenth on a rescission period depends on when the relevant period began: if the period began before the bill adding Juneteenth as a holiday was signed, June 17th or before, then June 19th should be considered a business day; if the period began after June 17th, then June 19th must be considered a federal holiday.  This is true for any timing period, not just for rescission.  In any event, consistent with prior guidance, a lender may have accounted for Juneteenth as a holiday, no matter when the period began, thus providing for a longer rescission period than required by Regulation Z.

The guidance also reiterates that federal holidays for purposes of the specific business day rule are not modified by a day of observance, e.g., if observed by an entity on Friday, June 18, 2021, the specific business day rule must still consider Friday a business day and Saturday a holiday.

The CFPB’s press release announcing the new guidance can be found here.