Juneteenth Impact Update
Yesterday, we sent a Law Letter regarding the impact of the new Federal Holiday, Juneteenth National Independence Day. This new Federal holiday is June 19 and will be celebrated in 2021, which will have an impact on Closing Disclosure review periods and rescission periods.
Although there were rumors the CFPB would issue guidance to residential mortgage lenders and the TILA timing impact, no guidance has yet been issued as of the writing of this Law Letter. Credit Unions should adjust their closing/funding pipeline so that Saturday, June 19, 2021 is no longer counted as a business day. Although government offices are observing the holiday today, today is still a business day for TRID and rescission purposes – it is Saturday that is no longer the business day.
TRID IMPACT
For Closing Disclosure review purposes, this may delay closings. For example, suppose a member was scheduled to close Monday, June 21, and they received their initial closing disclosure on Thursday, June 17. That closing must now be delayed to Tuesday, June 22 so that the member has three business days to review the CD (Thursday, Friday and Monday).
The 3 business day review period for closing disclosures may be waived if there is a “bona fide personal financial emergency.” To waive the 3 day review period, the requirements of 12 C.F.R. §1026.19(a)(3) must be met. Those requirements are:
- Consumer has received CD
- Member must have a bona fide personal financial emergency – the member must provide lender a written statement that:
- Describes the financial emergency
- Specifically waives or modifies the 3 business day waiting period
- Dated
- Signed by all borrowers
This waiver should be in the borrower’s handwriting – preprinted forms are prohibited
If the loan is being sold, verify that the investor will still purchase the loan with the waiver.
RESCISSION IMPACT
For rescindable loans that closed June 16 – June 18, we recommend credit unions provide an additional day for the member to rescind the loan. This will mean recording/funding will also be extended by 1 day. For example, suppose a loan closed June 16, the member had until midnight of June 19 to rescind, with scheduled funding on June 21. In this example, the member would be notified that they had until June 21 to rescind, and recording/funding will occur on June 22.
The good news is that members will not need to sign a new notice of right to cancel disclosure, updating the rescission date. This is because the notice of right to cancel form provides language stating the rescission expiration is 3 business days after the date of closing.
The right to cancel may also be waived or modified under 12 C.F.R. §1026.23(e). To waive the 3 day Right of Rescission:
The member must have a bona fide personal financial emergency – the member must provide lender a written statement that:
- Describes the financial emergency
- Clearly states that member is waiving the right to rescind.
- Dated
- Signed by all borrowers and anyone else who has the right to cancel.
This waiver should be in the borrower’s handwriting – preprinted forms are prohibited
If the loan is being sold, verify that the investor will still purchase the loan with the waiver.
Please let us know if you have any questions on Juneteenth’s impact on your lending program.
Sincerely,
BairdLaw
242 W. Sunset, Ste. 201
San Antonio, TX 78209
210-828-5844
www.bairdlaw.com |
