MBA, Lenders Seeks Clarity on Juneteenth Holiday Designation

With unusual speed and rare bipartisan agreement, Congress last week passed, and President Biden signed, legislation designating June 19—colloquially known as “Juneteenth”—a federal holiday, a move welcomed by Americans and supported by the Mortgage Bankers Association and thousands of businesses nationwide. But the speed of the designation—with Friday, June 18 designated a federal holiday—resulted in unintended consequences and disruption for the mortgage lending industry.

“MBA applauds the President and Congress for designating Juneteenth as a federal holiday,” MBA said in a statement on Thursday, June 17, shortly after President Biden signed the measure. “It is an important day marking a significant milestone in the history of our country and should be publicly recognized. However, an unintended consequence of the creation of a new public holiday a day before its legal observance is the potential for significant disruption to the housing market, which relies on contractually designated dates and is subject to legally mandated timing requirements regarding disclosures.”

MBA requested urgent guidance from the Consumer Financial Protection Bureau and other banking regulators to address the disruptions caused by requiring the legal observance of a public holiday with no advance notice. However, by Friday, June 18, when the holiday went into effect, no clarifications had been issued, creating uncertainty and confusion among mortgage lenders and servicers.

“We have spent the past 24 hours attempting to secure clear guidance from the CFPB and the banking regulators on how mortgage lenders should deal with the creation of a federal holiday just one day before its observance,” said Pete Mills, MBA Senior Vice President of Residential Policy and Member Services, in a Friday communique to MBA members.

After working hours on Friday, the CFPB issued a clarifying statement. “The CFPB, along with the other Financial Institutions Reform, Recovery and Enforcement Act regulators, 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 timing requirements,” said Acting CFPB Director Dave Uejio. “The CFPB recognizes that some lenders did not have sufficient time after the Federal holiday declaration to consider whether and how to adjust closing timelines. The CFPB understands that some lenders may delay closings to accommodate the reissuance of disclosures adjusted for the new Federal holiday. The CFPB notes that the TILA and TRID requirements generally protect creditors from liability for bona fide errors and permit redisclosure after closing to correct errors. Any guidance ultimately issued by the CFPB would take into account the limited implementation period before the holiday and would be issued after consultation with the other FIRREA regulators and the Conference of State Bank Supervisors to ensure consistency of interpretation for all regulated entities.”

As of Friday, other federal agencies—the Office of the Comptroller of the Currency; the Federal Reserve; and the Federal Deposit Insurance Corp.—had provided no definitive guidance to banks on whether they should be open or not. However, the Fed Payments system remained open. Most banks remained open on Friday but some closed early–resulting in potential disruptions for borrowers with closings scheduled. MBA urged borrowers should be advised to check their bank’s closing time.

MBA provided suggestions to the CFPB Thursday that would establish narrow exceptions (limited to this year’s Juneteenth observance) to the “business day” counting rules in Reg Z and TRID to mitigate possible market disruptions. Mills said the Bureau may issue clarifications or FAQs this week.

“We recognize the disruption this lack of guidance is causing,” Mills said. “As always in such matters, we urge members to consult with counsel for specific compliance guidance. We will remain in discussion with the CFPB and other regulators to ensure that any after-the-fact guidance protects lenders acting in good faith to comply with the rules and meet customer needs. While this confusion is regrettable, it does highlight the impressive culture of compliance and attention to the rules among MBA membership.”