Spring is in full bloom which means summer is right around the corner…and all its accompanying Federal holidays…Memorial day, Juneteenth, Independence Day, and Labor Day.  These holidays can pose a challenge for compliance officers trying to calculate their delivery date under the TRID mailbox rule or determine when the right of recission expires on a mortgage transaction.  Now seems like a good time to revisit how Regulation Z defines “business day” and how it can impact regulatory timing requirements.

Regulation Z has two different definitions of “business day.”  There is the general definition of business day which states that “business day” means a day on which the creditor’s offices are open to the public for carrying on substantially all of its business functions.”  To clarify, “substantially all of its business functions” does not just mean one drive-thru ATM is open.  Looking at the commentary, we see that this part means the credit union has availability of personnel to make loan disbursements, to open new accounts, and to handle credit transaction inquiries.  This general definition of “business day” is the default definition in Regulation Z UNLESS the regulation specifies that the more precise definition applies.

A more precise rule for what is a “business day” (all calendar days except Sundays and the Federal legal holidays specified in 5 U.S.C. 6103(a)) applies when the right of rescission, the receipt of disclosures for certain dwelling- or real estate-secured mortgage transactions under §§ 1026.19(a)(1)(ii), 1026.19(a)(2), 1026.19(e)(1)(iii)(B), 1026.19(e)(1)(iv), 1026.19(e)(2)(i)(A), 1026.19(e)(4)(ii), 1026.19(f)(1)(ii), 1026.19(f)(1)(iii), 1026.20(e)(5), 1026.31(c), or the receipt of disclosures for private education loans under § 1026.46(d)(4) is involved.  Five Federal legal holidays are identified in 5 U.S.C. 6103(a) by a specific date: New Year’s Day, January 1; Juneteenth, June 19; Independence Day, July 4; Veterans Day, November 11; and Christmas Day, December 25. When one of these 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 cases where the more precise rule applies, the observed holiday (in the example, July 3) is a business day.   Only in these sections specifically referenced in Regulation Z does the more precise definition apply.  Otherwise, the default definition is the general definition of “business day” in Regulation Z which uses the business function test to determine whether substantially all business functions are carried out that day.

It is also worth noting that the situation could arise where a public holiday could count under the general definition of a business day.  For example, if a credit union is open on a holiday and carrying out substantially all of its business functions, then that day would count as a “business day” under the general definition.  It would not, however, count under the precise definition of a “business day” that automatically excludes all federal holidays for purposes of recission, disclosures for certain mortgage transactions, and private education loans.

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