On March 25, 2022, in the Texas Register, the Finance Commission of Texas and the Texas Credit Union Commission (“Commissions”) proposed a new definition of “business day” in the Commissions’ interpretations of laws governing Home Equity Lending.
The Texas Constitution imposes certain disclosure requirements on lenders in the making of a home equity loan which are subject to timing restrictions. Under Section 50(a)(6)(M)(ii), a lender must provide a preclosing disclosure to the owner at least one business day before the closing of a home equity loan. Under Section 50(f)(2)(D), when a lender refinances a home equity loan into a non-home-equity loan, the lender must provide a refinance disclosure within three business days after receipt of an application.
The Commissions provide an interpretation of “business day” at 7 TAC § 153.1(2), which specifically defines a business day as all calendar days except Sundays and a specific list of federal public holidays. Previously, the list of federal public holidays aligned with the list of national public holidays at 5 U.S.C. 6103(a) which is used as the basis for timing of federal mortgage disclosures, including under Regulation Z, and is commonly referred to as the federal “specific” business day. However, in 2021, Juneteenth National Independence Day was added to the list at 5 U.S.C. 6103(a).
The Commissions’ proposal would update the interpretation at 7 TAC § 153.1(2) to expand the definition of business day to contain three definitions of “business day”:
- The first definition would apply for interpretations at 7 TAC §153.13, which relate to preclosing disclosures required under Texas Constitution Section 50(a)(6)(M)(ii). The new definition would state that a business day is a calendar day except for Sunday or a legal public holiday described by federal law. This is similar to the current definition of "business day" in §153.1(2) but adds Juneteenth National Independence Day as a listed holiday by simply referencing 5 U.S.C. 6103(a), which also allows for future amendments to the federal definition.
- Second, for interpretations at 7 TAC §153.45 covering disclosures for a refinance of a home equity Loan under Texas Constitution Section 50(f)), the proposal would amend §153.1(2) to state that a business day is a day on which the lender's offices are open to the public for carrying on substantially all of its business functions. This definition aligns with the federal “general” business day definition.
- The third definition would apply to provisions of 7 TAC §153.25, which relate to rights of rescission under Texas Constitution Section 50(a)(6)(Q)(viii). This new definition would refer to the business day definition under Regulation Z at 12 C.F.R. §1026.2(a)(6) that applies for purposes of rescission.
The interpretations provided by the Commissions in Chapter 153 of the Texas Administrative Code, Title 7, are administered by the Texas Department of Banking, Department of Savings and Mortgage Lending, Office of Consumer Credit Commissioner, and Texas Credit Union Department (collectively, the “Joint Financial Regulatory Agencies”). The Joint Financial Regulatory Agencies circulated the contents of the proposal amongst stakeholders ahead of its publication in the Texas Register by the Commissions and participated in an online webinar regarding the changes. As a result, the Joint Financial Regulatory Agencies received feedback from interested parties ahead of the proposal which allowed for modification of the proposal before its publication. For example, as a result of this feedback, the Commissions also included an explanation in the definitions regarding the effect of observed holidays which fall on different days than listed for the first definition of business day. The act of observing on a different day does not modify the definition according to the Commissions’ interpretations.
The Commissions are accepting comments on the proposal through the 30th day following publication in the Texas Register, which was on March 25, 2022.
