CFPB Comments on the Impact of National Holidays on Mortgage Maturities | Goodwin

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On June 17, 2021, President Joe Biden signed into law. National Independence Day Act June 19… The new Federal holiday has become a historic and long-awaited event of national importance. However, the law making June 19 a federal holiday, which was celebrated by the federal government on Friday, June 18 this year, was passed quickly and resulted in unintended disruptions to the home mortgage lending industry. The holiday affected the timing of certain requirements based on “business days” under the Truth in Credit Act (TILA) and Regulation Z.

Under the TILA Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure Rule (TRID), the lender is generally responsible for delivering or mailing the requested loan no later than the third business day after receiving the application from the consumer. The consumer must also receive the final disclosure at least three business days prior to the completion of the transaction. Provision Z also allows the consumer, in the event of certain types of refinancing, to cancel the transaction within three business days after its completion.

TILA and Position Z contain two definitions “working day»For different purposes. For the purpose of providing a loan valuation, a business day is defined as “the day on which the lender’s offices are open to the public to carry out significant part or all of its business functions.” There is also a specific definition of the term “business day” for other purposes, such as calculating days, to ensure that the consumer receives the final disclosure and the consumer’s right to opt-out in a timely manner. For these purposes, “business day” is defined as “all calendar days other than Sunday and public holidays specified in 5 USC § 6103 (a), eg New Years, Martin Luther King’s Birthday, Washington’s Birthday, Memorial Day, independence, Labor Day, Columbus Day, Veterans Day, Thanksgiving and Christmas. ” The June 16 National Independence Day Act amends 5 USC 6103 (a), adding “National Independence Day June 19, June 19” as a statutory public holiday.

After the law was passed, industry groups including the Mortgage Bankers Association and the American Bankers Association requested urgent advice from the Consumer Financial Protection Bureau (CFPB) and other banking regulators to address the disruptions caused by the legal requirement to comply with a public holiday without prior notice. notification.

CFPB issued statement at the end of the day, June 18, 2021. CFPB Acting Director Dave Wedgio raised industry concerns about a new Federal Holiday, in particular due to mortgage lenders’ compliance with TILA and TRID time requirements. “The CFPB acknowledges that some lenders have not had enough time since the federal holiday to consider whether and how to adjust the closure timeline. The CFPB understands that some lenders may postpone the closure to accommodate re-disclosures, adjusted for a new federal holiday. ” Uejio also noted that “TILA and TRID requirements generally protect lenders from liability for good faith errors and permit re-disclosure after closure to correct errors.” The CFPB has indicated it may issue additional instructions as Uejio stated that “[a]Any additional guidance eventually issued by the CFPB will take into account the limited implementation period prior to the holiday and will be released in consultation with other FIRREA regulators and the Conference of State Banking Supervisors (CSBS) to ensure consistent interpretation for all regulated entities. “

The CFPB’s statement did not address litigation risks and recession rights, two important issues for the mortgage industry. LenderLaw Watch will continue to monitor any further guidance from the CFPB on this matter.

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