On June 17, 2021, President Biden signed legislation making Juneteenth National Independence Day a federal national holiday. The first observance of the holiday is Friday, June 18, 2021. While the enactment of this new federal holiday is a notable and welcome national event, its first observance has immediate consequences for the timing of certain disclosures provided in connection with residential mortgage transactions.
Under the Truth in Lending Act (TILA) Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure Rule (TRID), generally, the creditor is responsible for ensuring that it delivers or places in the mail the loan estimate (LE) no later than the third business day after receiving the consumer’s application. Further, creditors must ensure that the consumer receives the closing disclosure (CD) at least three business days before consummation of the transaction. In addition, for certain refinancings, Regulation Z permits the consumer to rescind (cancel) the transaction within three business days after consummation.
For purposes of providing the LE, a business day is a day on which the creditor’s offices are open to the public for carrying out substantially all of its business functions. However, the term “business day” is defined differently for other purposes, such as counting days to ensure the consumer receives the CD on time and the consumer’s exercise of the right to rescind the transaction. For these purposes, “business day” means all calendar days except Sundays and the legal public holidays specified in 5 U.S.C. 6103(a): 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.
Notably, Comment 2(a)(6)-2 of the official staff commentary to Regulation Z indicates that when one of the federal holidays (July 4, for example) falls on a Saturday, federal offices and other entities might observe the holiday on the preceding Friday (July 3). In these cases, the observed holiday (in the example, July 3) is a business day. Following that logic, the observed Juneteenth holiday (Friday, June 18) is a “business day” and the actual stated holiday (Saturday, June 19) is the “holiday” for purposes of the CD and right of rescission waiting periods.
For residential mortgage transactions that are anticipated to close in the next few days, it is essential that creditors treat the actual Juneteenth holiday (June 19) as a federal holiday for purposes of the timing requirements of providing the CD (with the observed holiday of Friday, June 18 being treated as a “business day”) and allowing sufficient time to elapse for the borrower’s right to rescind the transaction. Further, documentation such as the Notice of Right to Cancel may need to be redated to take account of the new holiday.