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Our bank will be closed in observance of Veterans Day, but someone told me that it will not be considered a holiday for purposes of timing requirements for providing certain Regulation Z disclosures, including the right of rescission, loan estimates, and the closing disclosures. What is a "holiday" under Regulation Z? More precisely, is it not a holiday if the federal government and the bank are closed?

This is a timely question as many bank employees will have the day off on Nov. 12, 2018 in observance of Veterans Day and, shortly, many will have days off for Thanksgiving, Christmas, and New Year's Day.

Let us just acknowledge up front that it is a little complicated. The meaning of "business day" varies depending on the specific requirement.

Under §1026.2(a)(6) of Regulation Z, business day generally means "a day on which the creditor’s offices are open to the public for carrying on substantially all of its business." Thus, generally, if the bank is closed, it is not a business day.

However, a different definition applies to specific provisions. For these sections, business day means all calendar days except Sundays and the federal legal holidays listed in 5 U.S.C. § 6103(a). That lists ten legal holidays, four of which are listed as being on a specific date:

  • New Year's Day, January 1;
  • Independence Day, July 4;
  • Veterans Day, November 11; and
  • Christmas Day, December 25.

Comment 2(a)(6)-2 further clarifies that for these four holidays, only the date specified in the statute is considered a legal holiday. Thus, if the specified holiday date falls on a weekend – such as the case next month where Veterans Day, November 11 will fall on a Sunday the Friday before and the Monday following are considered a "business day" even if government offices or the bank is closed in observance of the holiday.

This "holiday" definition of business day applies, for example, to the right of rescission, that is, the right to rescind certain home-secured loans until midnight of the third business day following consummation or the delivery of certain disclosures, whichever occurs last. In addition, it applies to timing requirements for disclosures required for reverse mortgages per §1026.19(a), escrow account cancellation notices for certain mortgages per §1026.20(e)(5), certain "high-cost" closed-end mortgages per §1026.31(c), and student loans per §1026.46(d).

With regard to closed-end mortgage disclosures, the definition of business day that applies will depend on the specific requirement. For example, the "holiday" definition of business day applies to the requirement under §1026.19(e)(1)(iii)(B) that loan estimates for closed-end mortgage loans be delivered or mailed not later than the seventh business day before consummation of the transaction. However, the more general definition of business day — based on whether the bank was open for substantially all of its business — applies to $1026.19(e)(1)(iii)(A) which requires creditors to deliver or mail the loan estimates not later than the third business day after receipt of the application, (See §1026.2(6) and Comment 2 to §1026.2(a)(6).) Thus, if the bank was "not open for substantially all of its business" on Nov. 12, 2018, that day is not a business day for purposes of sending a mortgage loan estimate after application, but it is a business day for purposes of determining the number of days before consummation.

The other sections to which the "holiday" definition of business day applies are:

§1026.19(e)(1)(iv) related to the receipt of early mortgage disclosures (i.e., good faith estimates) if they are not provided to the consumer in person;

§1026.19 (e)(2)(i)(A) related to prohibitions against imposing fees prior to the consumer receiving the early mortgage disclosures;

§1026.19 (e)(4)(ii) related to receipt of revised early mortgage disclosures; and

§1026.19(f)(1)(iii) related to the receipt of final mortgage disclosures if they are not provided to the consumer in person.

In summary, Monday, Nov. 12, 2018 may or may not be considered a business day, depending on the section of the regulation. Going forward, it would be prudent to review the "holiday" definition of business day in Regulation Z and the related Commentary and then compare the timing requirements applicable to particular requirements. Once achieved, it may be time to take the next holiday off...regardless of whether it is a business day. Luckily, Christmas and New Year's Day do not fall on the weekend this year! (October 2018)

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