The upcoming Memorial Day holiday offers an opportunity to revisit a topic that seems to be of interest to mortgage lenders around every federal holiday – Can we close a loan on a holiday? If a closing does take place on a federal holiday, how does that affect the counting of “business days” for rescission and disclosure purposes? Is there a resource that I can refer to whenever these questions come up? You’ve come to the right place. Mortgage Closings On Federal HolidaysThere is nothing in federal law that would prevent a lender from closing a mortgage loan on a federal holiday, assuming that the lender can arrange for a settlement agent or other appropriate closer to be available for the loan closing on that day. Nor is there any federal law provision providing that consummation on a holiday does not become effective until the following business day. What Days May Be Counted In The Rescission Period?The consumer can enter into a loan transaction on a federal holiday and the first business day after the holiday will then be Day 1 of the rescission period. In the case of Memorial Day, which is always a Monday, that Day 1 is the following day (Tuesday). Regulation Z only prohibits you from counting the holiday in the rescission period, it does not prohibit you from closing or funding a loan on the holiday. Note also that disclosures that start a countdown starting with the day of receipt can be received on a holiday, but the countdown does not start until the following business day – for example, a Closing Disclosure may be received electronically by a consumer on Memorial Day (a Monday), but the first day in the three day waiting period will be Tuesday. What Days Are Included In Other Federal Disclosure Periods?“Specific” business days (all days but Sunday and federal holidays) applies to:
“General” business days (all days where lender is open to the public for carrying on substantially all business functions) applies to:
Currently, federal legal holidays are:
Note that when a federal holiday (excluded from the definition of “Specific” business day) falls on a weekend and the “Observed” holiday is recognized on a Friday or Monday, that Friday or Monday is not considered a federal holiday. Section 1026.2(a)(6) of Reg Z and its commentary are clear that when one of these holidays (July 4, for example) falls on a Saturday, federal offices and even some businesses might observe the holiday on the preceding Friday (July 3), but that observed holiday will be a “specific” business day. However, if the lender is not open for business on that day, it will not be a “general” business day. Contact us Today to Learn MorePDF version of this article can be found here.
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