On June 17, 2021, President Biden signed Senate Bill 475 into law, making “Juneteenth” a federal holiday. Because June 19th (tomorrow) falls on a Saturday this year, the day will be observed by federal government offices on June 18, 2021 (today).
This new law, revising the list of federal holidays in the U.S. Code, will affect consumer credit lenders’ operations. It is important for lenders to review their processes to determine how this new holiday will impact their operations.
The Truth in Lending Act and Regulation Z provide two different definitions of “business day” – “general business days” and “specific business days,” and these business day definitions are applied differently with respect to certain requirements.
A “general business day” is defined to mean a day on which the creditor’s offices are open to the public for carrying on substantially all of its business functions. 12 C.F.R. § 1026.2(a)(6). Backroom operations that are not open to the public do not fall within this definition. The Commentary to Regulation Z notes that activities that indicate that the creditor is open for substantially all of its business functions include the availability of personnel to make loan disbursements and to handle credit transaction inquiries. Comment 1 to § 1026.2(a)(6).
A “specific business day” is defined to mean all calendar days except Sundays and the legal public holidays specified in 5 U.S.C. § 6103(a), which include New Year’s Day, the Birthday of Martin Luther King, Jr., Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day; and now “Juneteenth”. 12 C.F.R. § 1026.2(a)(6). The Commentary to Regulation Z states that when one of the Federal legal holidays specified in 5 U.S.C. § 6103(a) (Juneteenth this year, for example) falls on a Saturday, Federal offices and other entities might observe the holiday on the preceding Friday (June 18). In cases where the more precise rule applies (e.g., rescission, waiting periods before consummation), the observed holiday (in the example, Juneteenth) is a business day, but the actual holiday (June 18) will not be a business day.
Therefore, for the more precise purposes (e.g., rescission, waiting periods prior to consummation), Friday is a business day and Saturday is not, meaning that in certain situations, the creditor may need to add one more business day (e.g., rescission may need to remain open for a day longer, or consummation may need to be scheduled a day later) than originally required for these purposes. For the general business day purposes, whether Friday and Saturday are business days depends on whether the company’s offices are open to the public for carrying on substantially all of its business functions.
The Mortgage Bankers Association has sought emergency guidance from the CFPB and the banking regulators on how creditors should deal with these matters. The MBA provided suggestions to the CFPB yesterday that would have provided narrow exceptions for this year only to the “business day” counting rules in Regulation Z and TRID referenced above that would hopefully minimize market disruptions, but the CFPB is not expected to respond today. The MBA speculated that the CFPB may issue clarifications or FAQ’s next week. In the meantime, it will be critical for creditors to take this new holiday into account the best they can.