On 6/18/2021, CFPB Acting Director, Dave Uegio, issued a statement on the impact of the new Juneteenth Holiday on residential mortgage closings. As a background, President Biden signed into law the Juneteenth National Independence Day Act on June 17, 2021, just two days before the actual new holiday of June 19, 2021. As this new holiday is a Federal Holiday, Financial Institutions immediately had concerns regarding implementation of the new Juneteenth Federal Holiday, particularly as it relates to mortgage compliance under Regulation Z and the Truth in Lending Act. In the CFPB guidance, Mr. Uejio stated the following:
“The CFPB, along with the other Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) regulators, is aware of concerns regarding implementation of the new Juneteenth Federal holiday, particularly as it relates to mortgage lender compliance with the Truth in Lending Act and TILA-RESPA 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. The CFPB understands that some lenders may delay closings to accommodate the reissuance of disclosures adjusted for the new Federal holiday. The CFPB notes that the TILA and TRID requirements generally protect creditors from liability for bona fide errors and permit redisclosure after closing to correct errors. Any guidance ultimately issued by the CFPB would take into account the limited implementation period before the holiday and would be issued after consultation with the other FIRREA regulators and the Conference of State Bank Supervisors (CSBS) to ensure consistency of interpretation for all regulated entities.”
While this guidance is not as clear as many would have liked, it appears the following statement is key to this guidance:
The CFPB notes that the TILA and TRID requirements generally protect creditors from liability for bona fide errors and permit redisclosure after closing to correct errors.
As far as making adjustment to last minute disclosure right after the rule passed, it appears that financial institutions essentially had three options:
Do nothing for the Juneteenth Holiday this year, based on the risk associated with the number of loans in process affected by the change.
Update the rescission notice and Closing Disclosure with a new date that includes the Juneteeth Holiday
Provide each applicable consumer with a new rescission document and Closing Disclosure to restart the clock for these disclosures.
While the decision on which approach above was a risk-based decision, the third option (provide new disclosure to restart the clock) was the most conservative approach that mitigated the greatest amount of risk.
The full CFPB statement can be found here.