Juneteenth, TRID, & Social Media

By Melissa Thomas

On June 17th, President Joe Biden signed Congressional Bill S. 475 into law at 3:51pm, effectively adding Juneteenth as a new federally recognized holiday. Juneteenth, celebrated on June 19th, commemorates the day that hundreds of thousands of enslaved people in Texas finally learned of their legal freedom through the Emancipation Proclamation, executed nearly two and half years earlier.

In President Biden’s remarks at the signing of the new bill, he stated “This is a day of profound — in my view — profound weight and profound power. A day in which we remember the moral stain, the terrible toll that slavery took on the country and continues to take…At the same time, I also remember the extraordinary capacity to heal…”. While this new bill could be considered a step forward in the country’s healing process, the short notice enactment of this bill posses unprecedented hardships for lenders nationwide.

Timelines & Disclosures

Under the Truth in Lending Act (TILA) & Regulation Z, there are a variety of timelines that are affected by the inclusion of this new federal holiday, including: the waiting periods that apply to the TRID rule disclosures and right of rescission, the date that private education loan disclosures mailed to the consumer are deemed to be received, and the date that the right to cancel a private education loan expires. These regulations also have multiple definitions for what is considered a “business day”:

  • (1) For the purpose of providing a Loan Estimate (LE) to a consumer, a business day is “a day on which the creditor’s offices are open to the public for carrying on substantially all of its business services” [(Comment 19(e)(1)(iii)-1, §1026.2(a)(6))].
  • (2) The term “business day” is defined differently for other purposes than the LE. For the purposes of counting days to ensure the consumer receives the Closing Disclosure (CD) on time is “all calendar days except Sundays and the legal public holidays specified in 5 U.S.C. 6103(a), such as 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.”

Bill S. 475 amends title 5 of the United States Code to designate Juneteenth as a legal public holiday by inserting “ Juneteenth National Independence Day, June 19.” After the item relating to Memorial Day in Section 6103(a).

Observed Holiday vs Right of Recession

During this pandemonium, there was some confusion about the timing of TRID disclosures and when the “holiday” would be applicable. Many lending institutions are following the prescribed as part of investor guidance: as Saturday’s count towards “business days” the observed Juneteenth holiday (Friday, June 18, 2021) would be considered a “business day” and the actual stated holiday (Saturday, June 19, 2021) is the “holiday” for purposes of the Closing Disclosure and right of rescission waiting periods. Comment 2(a)(6)-2 of the Official Staff Commentary to Regulation Z indicates that when the federal holiday falls on a Saturday, but federal offices and other entities observe the holiday the preceding Friday, the observed holiday is (I.e., Friday) is a “business day”.

Social Media Risks

The American Bankers Association (ABA) has also urged the CFPB to Provide Guidance on the last-minute holiday and how it will affect mortgage closings, but no new CFPB Guidance has been issued at this time. In the absence of regulatory or agency guidance, financial institutions should continue to monitor loan officer social media activity for both regulatory & brand reputation issues that might arise. Lenders should be on the lookout for conversations around the Juneteenth holiday to ensure, much like forbearance conversations, that consumers are not misled and to reduce the risk of both enforcement actions as well as private rights of action. There may also be a rise in political or inappropriate language as well around this topic.

Updates: Acting Director Dave Uejio of the CFPB released a statement on June 18th about the addition of the new federal holiday, commenting that "the CFPB 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 press release also recognized the different paths financial institutions were taking in regards to timing requirements, both lenders who delayed closings with reissuance of disclosures and, alternatively, lenders who proceeded with closings under the impression of liability protection for bona fide errors under TILA and TRID with redisclosure after closing to correct errors. Though these paths were acknowledged, many lenders felt the CFPB did not take an affirmative stance on which path was most appropriate. 

ActiveComply will continue to monitor this situation as new information arises.