When A Business Day Is/Isn't A Business Day
Truth in Lending now has three definitions of business day, used for three different purposes in the regulation. Other lending regulations have similar but slightly different definitions of business day. It makes counting days fairly complicated. To help you sort out the confusion, we offer the following chart.
For general purposes, the definition of business day is a day that the bank is open for most business functions. At a minimum, that means a day when a customer may enter the bank and apply for a loan. For special consumer protection purposes, such as the waiting period for rescission and special high cost loans, Regulation Z uses a different rule. For these, business days are counted as any day that is not a Sunday or a federal holiday. Compliance Action thinks of this as the "Post Office Rule." At this stage, the responsibility to act falls on the consumer. The regulation therefore counts as business days those days when the post office is open and the consumer can mail the form to the creditor. Using this memory trick, bank staff only need to remember that rescission runs until midnight of the third day while for high cost loans, the period expires on the third business day.
Regulation Situation/Purpose Days Included Regulation Z General Every day that the bank is open for most business functions. Regulation Z Rescission Every day except federal holidays ("Post Office Rule"). Disburse AFTER midnight of third day. Regulation Z High Cost Loans Every day except federal holidays. Disburse on third day. RESPA General - Days to deliver Good Faith Estimates, HUD-1s, and Servicing Disclosure Statement A day on which the lender's offices are open to the public for carrying on substantially all of the business functions. RESPA Transfer of Servicing Notice For purposes of the 15-day notification of sale of servicing, the rule uses calendar days, not business days.
Copyright © 1996 Compliance Action. Originally appeared in Compliance Action, Vol. 1, No. 15, 10/96
First published on 10/01/1996