(Aug. 27, 2021) Two new summaries of recent CFPB rules – on clarifying the impact of the Juneteenth holiday, and Military Lending Act (MLA)-related exams – have been developed and posted by NASCUS. The summaries are available to members only.
In an interpretive rule issued in July, the bureau attempted to clarify when the new Juneteenth holiday (federally observed for the first time this past June) counts as a business day or federal holiday for purposes of mortgage rescissions and disclosures. According to the rule, that depends on when the relevant time period for the loan began. According to the bureau, if the relevant time period began on or before June 17, then June 19 was a business day. If the period began after June 17, then June 19 was a federal holiday. The timing effects rescission of closed-end mortgages and TILA-RESPA integrated disclosures, the bureau said.
Regarding MLA, the agency said in an interpretive rule effective in June that examinations under the law will now resume, asserting that the prior administration’s reasoning for discontinuing the reviews were not found persuasive. The rule explains the basis for its authority to examine supervised financial institutions for risks to active duty servicemembers and dependents from conduct that violates the MLA. (The MLA, enacted in 2006, and implemented by the Department of Defense, applies to consumer credit offered to military service members and their dependents by, among other things, limiting the interest rates that may be charged on many types of consumer loans to no more than 36%.)
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(Aug. 6, 2021) Whether the new Juneteenth federal holiday (federally observed for the first time this past June) counts as a business day or federal holiday for purposes of mortgage rescissions and disclosures depends on when the relevant time period for the loan began, CFPB said in an interpretive rule issued Thursday.
According to the bureau, if the relevant time period began on or before June 17, then June 19 was a business day. If the period began after June 17, then June 19 was a federal holiday. The timing effects rescission of closed-end mortgages and TILA-RESPA integrated disclosures, the bureau said.
CFPB also said its interpretive rule explains that creditors are not prohibited from providing longer time periods than required.
For example, CFPB said, if a time period began on or before June 17, creditors could still consider June 19 a federal holiday. “Friday, June 18, the day of federal observance for the 2021 Juneteenth holiday, was considered a business day because when a federal holiday falls on a Saturday, the day of federal observance is considered a business day for these time-sensitive consumer protections,” the agency stated.
The federal holiday was officially observed June 18 (since June 19 was a Saturday). The holiday became law June 17, the day it was enacted by President Joe Biden’s (D) signature. The holiday went into effect the following day, June 18.
The agency noted that Regulation Z of its mortgage rules establishes timing requirements, calculated in business days, for when borrowers must receive certain disclosures and when borrowers have the right to cancel some mortgages. “Because the Juneteenth National Independence Day Act was signed into law two days before the newly created holiday on June 19, many participants in the mortgage industry reported being unsure of how to treat the day for purposes of regulatory compliance.
“The mortgage industry can refer to today’s interpretive rule when determining how to treat June 19, 2021,” CFPB added.
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(June 25, 2021) The timing of mortgage lenders’ compliance with federal disclosure rules may have been disrupted with the abrupt implementation of the new “Juneteenth” federal holiday late last week – perhaps even delaying mortgage closings – the CFPB said it was aware of concerns those disruptions have raised.
In a statement, bureau Acting Director Dave Uejio said the concerns revolved around mortgage lender compliance with Truth in Lending Act (TILA) and TILA-RESPA (Real Estate Settlements Protection Act) Integrated Disclosure (TRID) timing requirements. “The CFPB recognizes that some lenders did not have sufficient time after the Federal holiday declaration to consider whether and how to adjust closing timelines,” Uejio wrote. “The CFPB understands that some lenders may delay closings to accommodate the reissuance of disclosures adjusted for the new Federal holiday.”
Uejio said both TILA and TRID requirements generally protect creditors from liability for bona fide errors and permit redisclosure after closing to correct errors.
The acting CFPB director said any guidance ultimately issued by the CFPB would consider the limited implementation period before the holiday and would be issued after consultation with both federal and state financial institution regulators “to ensure consistency of interpretation for all regulated entities.”
(June 18, 2021) The designation of a federal holiday to mark Juneteenth – the commemoration of the emancipation of enslaved people in the United States – is both a time for celebration and a cause for somber reflection, said NASCUS President and CEO Lucy Ito in a statement issued by NASCUS this week.
On Thursday, President Joe Biden (D) signed into law a measure marking Juneteenth as a federal holiday. Ito issued her statement in keeping with the association’s commitment made a year ago in the wake of the death of George Floyd that NASCUS believes that Black lives matter and NASCUS and the state system are committed to fostering an environment free of racism where everyone is seen, heard and respected.
“Juneteenth is a time to celebrate the word of freedom reaching the enslaved in Texas in late 1865 and the end of lawful slavery in the country,” Ito said. “It is a time for somber reflection on the fact that too many have had to wait for the freedom and individual dignity upon which our nation was founded to apply to them. The civil unrest and social justice movements of today are a reminder that for many, the wait for true equality and opportunity continues.
“NASCUS deeply values the diverse experiences and voices of our staff, leadership, and members. But we fully appreciate that this is not enough. As we reflect on this Juneteenth, we at NASCUS recommit ourselves to the ideals of equality and respect to which we, as a society, should aspire. And we celebrate Juneteenth and its overdue nationwide recognition as an essential thread in our national fabric.”