CFPB Issues Compliance Guidance for Juneteenth Holiday

Whether mortgage lenders should have counted Juneteenth this year as a business day or a federal holiday depends on when the relevant compliance period began for each borrower, the Consumer Financial Protection Bureau said last week.

The CFPB has issued an interpretive rule to provide guidance for the mortgage industry on how to treat Juneteenth when determining whether lenders met certain time-sensitive compliance requirements.

Juneteenth National Independence Day became a federal holiday this year after a campaign in Congress to recognize the day in 1865 when United States soldiers arrived in Galveston, Texas, two months after the Confederacy had surrendered, bringing with them news of freedom for the city’s slaves thanks to the Emancipation Proclamation signed two years earlier, which ended slavery in rebel territory retaken by U.S. troops.

Bipartisan legislation moved through the House and Senate quickly, and President Joe Biden signed the federal holiday into law on June 17. Because June 19 fell on a Saturday, the government observed the holiday on June 18, but stock exchanges, the Postal Service, the Federal Reserve and other essential services remained open.

Many participants in the mortgage industry reported being uncertain about how to treat the day for purposes of regulatory compliance, the CFPB said in a statement.

“The federal recognition and celebration of Juneteenth was a welcome and important step toward healing the national legacy of slavery,” CFPB Acting Director Dave Uejio said. “We understand that the quick enactment of the federal Juneteenth legislation created interpretive questions and compliance challenges for the mortgage industry with respect to rescission of closed-end mortgages and certain time-sensitive mortgage disclosures.”

Calculated in business days, the timing requirements are established by Regulation Z of the CFPB’s mortgage rules and determine when borrowers must receive certain disclosures and when they have the right to cancel some mortgages.

The CFPB provided guidance for the timing of rescission of closed-end mortgages and for TILA-RESPA Integrated Disclosures (TRID). The agency said lenders should use the date when the relevant time period began to determine whether June 19, 2021, counted as a business day or federal holiday.

So, if the relevant time period began:

  • On or before June 17, 2021, then June 19 was a business day.
  • After June 17, 2021, then June 19 was a federal holiday.

However, the CFPB added that lenders could extend the time frames.

“[T]he interpretive rule explains that creditors are not prohibited from providing longer time periods than required, so if a time period began on, or prior to, June 17, 2021, creditors could still consider June 19, 2021, a federal holiday,” the CFPB said.