Last Monday was Columbus Day, and although it is a holiday that is not necessarily celebrated throughout the nation, it still is recognized by the U.S. Postal Service and TRID. So how should you approach holidays when delivering the Loan Estimate (LE) and Closing Disclosure (CD)? Does it count as one of your three required business days for disclosure deliveries and receipts?
TRID recognizes different kinds of business days. There are “specific business days,” which are all calendar days except for Sundays and federal holidays listed within the rule, and there are “general business days,” which are defined based on the lender’s practice (they technically can be any day of the week as long as the lender is open for business).
The definitions of these days are applied differently within TRID.
For instance, “general business day” applies to TRID’s provision requirements, such as providing the LE within three business days. On the other hand, “specific business day” applies to TRID’s receipt requirements, such as having the CD be received by the borrower at least three days before closing.
The CD receipt requirements are based on the “specific business day” definition because those days align with when the consumer could receive the CD if the lender mailed it through the U.S. Postal Service – and the borrower can receive a mailed CD on Saturdays.
“Where this gets tricky is with the CD-receipt requirement because the language in the rule and the commentary examples don’t explicitly tell you exactly how to count it, especially when there are Sundays or holidays involved,” Richard Horn of Richard Horn Legal PLLC, who led the final TRID rule while an attorney at the CFPB, told RESPA News.
So when there is an intervening Sunday, and it is the day the borrower actually received the CD or it’s the day they want to close, it is not clear whether TRID allows this or requires everything to be pushed back another day.
“The commentary examples in the rule really only talk about more frequent situations where the CD is received on a business day and the lender wants to close on a business day, so that’s a reason why dealing with holidays causes confusion,” Horn said.
Most industry participants take a conservative route on these issues, Horn added, because timing violations generally are regarded as incurable and can make the loan unsellable.
“There’s no way to fix it, because you can’t go back in time. So many of the lenders are viewing the timing issues very conservatively. A lot of folks say that if the borrower got the CD on a holiday or on a Sunday, they’re not going to consider them to have received it on that day and just start the count on the next business day. That’s what a lot of lenders are doing,” Horn said.
There are different counting methods to consider. For instance, some will start with the day the CD is received (“day zero”) and then count three days after that. So if the borrower received the CD on a Sunday or a (Monday) holiday, that is “day zero” and the next three business days are what matter. In that case, the borrower can close on Wednesday or Thursday.
But many who count forwards this way conservatively say that you can’t receive the CD on a non-business day, such as Columbus Day on Monday, so they would start the three-day count on Tuesday.
So there is counting forward, and then there is the method of counting backward from the day you want to close. If you want to close on Thursday, for instance, you could count backwards to the day of receipt (Wednesday, Tuesday, Monday). With Monday not being a specific business day, you only would have had two business days, meaning the borrower would have had to receive the CD on Saturday.
“People are using both the counting forward and backward methods, which can lead to different results, for example, if you want to close on a Sunday or holiday,” Horn explained. “But I think in either case this is not something that you want to be aggressive with, because people generally consider [timing violations] to be incurable.”
Horn added that he thinks the counting-backward method is more closely in line with the regulation.
“That’s the way the regulation’s text describes it, ‘three business days before consummation.’ So it’s basically saying to count three business days back from consummation. The regulation’s text doesn’t say you can close three business days after receipt, it says receipt three business days before,” he said.
Horn added that these issues are not discussed within the CFPB’s proposed amendments, recommending that industry participants provide comments before the comment period closes Oct. 18.
The following are the instructions for commenting on the CFPB’s proposed TRID amendments:
“Comments may be submitted by identifying Docket No. CFPB-2016-0038 or RIN 3170-AA61, and commenters may file their comments in three ways.
“Electronically, submissions are taking at www.regulations.gov, with instructions on the website for submitting comments.
“Comments may be sent in by email to [email protected] and including Docket No. CFPB-2016-0038 or RIN 3170-AA61 in the subject line.
“By snail mail, commenters can send in comments to Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1700 G S. NW, Washington, DC 20552. Comments also can be hand delivered or couriered to Jackson, but the address changes to 1275 First St. NE, Washington, DC 20002.
“Because paper mail in the Washington area and at the bureau is subject to delay, commenters are encouraged to submit comments electronically. In general, all comments received will be posted without change to the website at regulations.gov. Comments also will be available for public inspection and copying at 1275 First St. NE, Washington, DC 20002, on official business days between the hours of 10 a.m. and 5 p.m. ET. You can make an appointment to inspect the documents by calling 202-435-7275.”