Thread Options
#203902 - 06/24/04 03:47 PM Rescission and 4th of July
LoisLane Offline
Diamond Poster
LoisLane
Joined: Oct 2001
Posts: 1,570
Wisteria Lane..
In reminding everyone that (for rescission purposes) July 4 (Sunday) is to be counted as one of the three business days even though we (and the Post Office) are close July 5 for the holiday, I'm getting questions about why... When this commentary change came out in 2002, was there any reason given?
_________________________
And where is Superman when I need him?

Return to Top
Lending Compliance
#203903 - 06/24/04 03:54 PM Re: Rescission and 4th of July
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,246
Bloomington, IN
Lois, you have to look at the definition of a business day in Reg. Z. July 5th is not a designated holiday.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#203904 - 06/24/04 04:07 PM Re: Rescission and 4th of July
Andy_Z Offline
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,246
On the Net
As I recall, this wasn't a change. Richard Insley pointed this out. They clarified an existing rule.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Return to Top
#203905 - 06/24/04 04:21 PM Re: Rescission and 4th of July
GreatBlue Offline
Diamond Poster
GreatBlue
Joined: Feb 2003
Posts: 2,362
Colorado
Lois, I assume you meant to say July 5th has to counted as a business day, rather than July 4th?
_________________________
Opinions are mine and not necessarily my employer's.

Return to Top
#203906 - 06/24/04 04:56 PM Re: Rescission and 4th of July
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,265
I read the commentary to Reg Z re: business day but I'm still confused. Am I correct that:
  • 1) Sunday, July 4th IS a federal holiday (even tho it falls on Sunday) and is NOT counted for recission
  • 2) Monday, July 5th is not a designated holiday and, therefore, MUST be counted as a day for recission purposes.

    Thanks for the clarification. I'm just half a bubble off plumb today.

  • Return to Top
    #203907 - 06/24/04 04:58 PM Re: Rescission and 4th of July
    Dan Persfull Offline
    10K Club
    Dan Persfull
    Joined: Aug 2002
    Posts: 46,246
    Bloomington, IN
    You are correct. So now you may only be a 1/4 bubble off.
    _________________________
    The opinions expressed are mine and they are not to be taken as legal advice.

    Return to Top
    #203908 - 06/24/04 06:33 PM Re: Rescission and 4th of July
    SouthoftheBorder Offline
    Gold Star
    Joined: Feb 2002
    Posts: 335
    The South
    A 04 Rescission Calendar was posted here in the beginning of the year - but the calendar indicates the 5th would not be a business day..or am I reading the calendar wrong...of course I sent the calendar to all loan officers in Janurary.

    Return to Top
    #203909 - 06/24/04 06:44 PM Re: Rescission and 4th of July
    Truffle Royale Offline

    10K Club
    Joined: Jul 2003
    Posts: 17,265
    We were using the same calendar. It's not correct based on the Reg Z definition. It appears to be using days the Feds are closed as the criteria rather than the definition of business day dpersfull noted above.

    Return to Top
    #203910 - 06/24/04 09:07 PM Re: Rescission and 4th of July
    Anonymous
    Unregistered

    The jury is still out on this date as far as I'm concerned: The commentary illustrates using a Saturday as the holiday and when a holiday falls on a Saturday it's not mandatory that we provide a 'day off' to employees, but if the holiday falls on a Sunday we give the Monday off [actually don't know about the mandatory part] So I'm thinking that maybe the 5th would not be considered a business day and is considered a federal holiday. Could someone provide the link to the thread that fully describes what Richard Insley said about this.

    Return to Top
    #203911 - 06/24/04 09:16 PM Re: Rescission and 4th of July
    Dan Persfull Offline
    10K Club
    Dan Persfull
    Joined: Aug 2002
    Posts: 46,246
    Bloomington, IN
    I don't have a link to Richard's comments, but as Andy indicated Richard was saying the rule has always existed, they've just been "clarified" some.

    The rule of thumb has been if the post office was closed, it could not count toward the rescission day, all though this is good rule of thumb it is not always accurate.

    226.2: Definitions and Rules of Construction (01/01/97)

    (6) 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. However, for purposes of rescission under 226.15 and 226.23, and for purposes of 226.31, the term means all calendar days except Sundays and the legal public holidays specified in 5 USC 6103(a), such as New Year's Day, the Birthday of Martin Luther King, Jr., Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.

    Supplement I, 226.2: Definitions and Rules of Construction (01/01/03)

    2(a)(6) Business day. (added emphasis are mine)

    2. Rescission rule. A more precise rule for what is a business day (all calendar days except Sundays and the federal legal holidays listed in 5 USC 6103(a)) applies when the right of rescission or mortgages subject to 226.32 are involved. (See also comment 31(c)(1)-1.) Four federal legal holidays are identified in 5 USC 6103(a) by a specific date: New Year's Day, January 1; 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). The observed holiday (in the example, July 3) is a business day for purposes of rescission or the delivery of disclosures for certain high-cost mortgages covered by 226.32 .

    Edited: I forgot to add that the regs names 4 specific holidays by date:

    New Years Day - Jan 1
    Independence Day - Jul 4
    Veterans Day - Nov 11
    Christmas Day - Dec 25

    July 5 is not one of the designated dates.
    Last edited by dpersfull; 06/24/04 09:22 PM.
    _________________________
    The opinions expressed are mine and they are not to be taken as legal advice.

    Return to Top
    #203912 - 06/24/04 09:45 PM Re: Rescission and 4th of July
    LoisLane Offline
    Diamond Poster
    LoisLane
    Joined: Oct 2001
    Posts: 1,570
    Wisteria Lane..
    Quote:

    Lois, I assume you meant to say July 5th has to counted as a business day, rather than July 4th?




    Yes. Thanks for the catch
    _________________________
    And where is Superman when I need him?

    Return to Top
    #203913 - 06/24/04 10:48 PM Re: Rescission and 4th of July
    Richard Insley Online
    Power Poster
    Richard Insley
    Joined: Oct 2000
    Posts: 9,910
    Toano, VA
    The "mail truck" rule has always been a convenient training device for affected staff members, but as Dan observes, it's only a rule of thumb. The TILA and Reg. Z reference 5 USC 6103(a). Only the exact days listed there are federal holidays for rescission purposes, and it takes an act of Congress to amend the list. Presidential proclamations don't count and neither do Congressional acts that fail to amend 5 USC 6103(a).
    _________________________
    ...gone fishing.

    Return to Top
    #203914 - 06/24/04 11:14 PM Re: Rescission and 4th of July
    Andy_Z Offline
    10K Club
    Andy_Z
    Joined: Oct 2000
    Posts: 27,246
    On the Net
    Quote:

    The jury is still out on this date as far as I'm concerned:




    The jury is in: 226.2 Definitions and rules of construction.
    ... for purposes of rescission under 226.15 and 226.23, and for purposes of 226.31, the term means all calendar days except Sundays and the legal public holidays specified in 5 U.S.C. 6103(a), such as New Year's Day, the Birthday of Martin Luther King, Jr., Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.

    And from the clarification in OCC 2002-26, Finally, the revision clarifies the definition of "business day" for purposes of the right to rescind certain home-secured loans. Generally, the revisions clarify that only the actual day of four holidays (New Year's Day, January 1; Independence Day, July 4; Veterans Day, November 11; and Christmas Day, December 25) is excluded from the definition of "business day." If one of these dates falls on a weekend, the Friday before or the Monday following the date are considered business days even if government offices are closed in observance of the holiday.

    Hopefully this will clear things up.
    _________________________
    AndyZ CRCM
    My opinions are not necessarily my employers.
    R+R-R=R+R
    Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

    Return to Top
    #203915 - 06/25/04 02:00 PM Re: Rescission and 4th of July
    SouthoftheBorder Offline
    Gold Star
    Joined: Feb 2002
    Posts: 335
    The South

    That certainly clears things up. Thanks!

    Return to Top
    #203916 - 06/28/04 02:21 PM Re: Rescission and 4th of July
    Patsy Cline Offline
    Diamond Poster
    Patsy Cline
    Joined: Sep 2002
    Posts: 1,117
    On the road...
    What if the bank is closed Monday?
    _________________________
    Michelle CRCM

    "What would you attempt to do if you knew you could not fail?" ~ unknown


    Return to Top
    #203917 - 06/28/04 02:36 PM Re: Rescission and 4th of July
    Andy_Z Offline
    10K Club
    Andy_Z
    Joined: Oct 2000
    Posts: 27,246
    On the Net
    The customer can still rescind on Monday whether you are open or not.
    Last edited by Andy Z; 06/28/04 02:39 PM.
    _________________________
    AndyZ CRCM
    My opinions are not necessarily my employers.
    R+R-R=R+R
    Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

    Return to Top
    #203918 - 06/28/04 03:02 PM Re: Rescission and 4th of July
    Deena Offline
    Power Poster
    Deena
    Joined: Nov 2000
    Posts: 2,701
    PA
    What if we have already prepared closing papers for loans and have not counted Monday (7/5) as a business day - i.g., we are giving the borrower an extra day to rescind? Do we have to "re-do" (I don't think that's a word, but that's what they asked me and I can't think of a better one right now) the papers for all these loans? We do not charge interest during the rescission period.
    _________________________
    Opinions expressed are mine and not necessarily those of my employer.

    Return to Top
    #203919 - 06/28/04 03:15 PM Re: Rescission and 4th of July
    Truffle Royale Offline

    10K Club
    Joined: Jul 2003
    Posts: 17,265
    After reading this thread, we redid the necessary docs on our loans closing the end of this week.

    Return to Top
    #203920 - 06/28/04 03:20 PM Re: Rescission and 4th of July
    Dan Persfull Offline
    10K Club
    Dan Persfull
    Joined: Aug 2002
    Posts: 46,246
    Bloomington, IN
    Is this a benefit to the borrower? You are giving them an extra day to rescind, but you are also denying them access to their funds by an additional day. I don't think you have a regulatory problem if you are not charging interest.

    You may also want to see if your state laws have any specific requirements for rescission.
    _________________________
    The opinions expressed are mine and they are not to be taken as legal advice.

    Return to Top
    #203921 - 06/28/04 03:26 PM Re: Rescission and 4th of July
    Lestie G Offline

    Power Poster
    Joined: May 2002
    Posts: 3,604
    Near the Land of Enchantment
    Quote:

    You are giving them an extra day to rescind, but you are also denying them access to their funds by an additional day.




    Depending on your systems, you might not be able to give them access on Monday anyway, if your bank is closed. Right? Or am I confused?
    _________________________
    Opinions my own.

    Return to Top
    #203922 - 06/28/04 03:31 PM Re: Rescission and 4th of July
    Deena Offline
    Power Poster
    Deena
    Joined: Nov 2000
    Posts: 2,701
    PA
    Thanks, Dan.
    _________________________
    Opinions expressed are mine and not necessarily those of my employer.

    Return to Top
    #203923 - 06/28/04 03:33 PM Re: Rescission and 4th of July
    Anonymous
    Unregistered

    My take was that if you extended the ROR by not counting Monday, the borrowers wouldn't get their $$ till Wednesday instead of Tuesday.

    Return to Top
    #203924 - 06/28/04 04:15 PM Re: Rescission and 4th of July
    Dan Persfull Offline
    10K Club
    Dan Persfull
    Joined: Aug 2002
    Posts: 46,246
    Bloomington, IN
    Quote:

    My take was that if you extended the ROR by not counting Monday, the borrowers wouldn't get their $$ till Wednesday instead of Tuesday.




    That's correct.

    Your dealing with 2 definitions of business day in this scenario. The one that applies for ROR and the one that applies when you are open for normal business. This is also why you need to look at state law for any rescission limitations. For example the IN Code:

    IC 24-4.5-5-204: Debtor's Right to Rescind Certain Transactions

    Sec. 204. Debtor's Right to Rescind Certain Transactions.

    (1) A violation by a creditor of Section 125 of the Federal Consumer Credit Protection Act ( IC 24-4.5-1-302) concerning the debtor's right to rescind a transaction that is a consumer credit sale or a consumer loan constitutes a violation of IC 24-4.5. A creditor may not accrue interest during the period when a consumer loan may be rescinded under Section 125 of the Federal Consumer Protection Act (15 USC 1635).

    (2) A creditor must make available for disbursement the proceeds of a transaction subject to subsection (1) on the later of:

    (A) the date the creditor is reasonably satisfied that the consumer has not rescinded the transaction; or

    (B) the first business day (emphasis mine) after the expiration of the rescission period under subsection (1).

    If we're not open on Monday then it is not a business day for transacting business (the same as if it expires at Midnight on Saturday, for most banks Sunday is not a businees day), however that does not affect a business day for the ROR.
    _________________________
    The opinions expressed are mine and they are not to be taken as legal advice.

    Return to Top
    #203925 - 06/28/04 09:37 PM Re: Rescission and 4th of July
    Geoz Offline
    100 Club
    Joined: Apr 2003
    Posts: 148
    Colorado
    I double checked with my Loan Ops Manager to ensure Laser Pro was calculating rescission correctly (counting Monday as a business day). She input some dummy closing dates and found LaserPro is not counting Monday in the rescission period.

    I'm not a LaserPro expert, has anyone else noticed this problem on their loan doc system? I am told we can't override LaserPro.

    Return to Top
    #203926 - 06/28/04 11:07 PM Re: Rescission and 4th of July
    Geoz Offline
    100 Club
    Joined: Apr 2003
    Posts: 148
    Colorado
    The April 9, 2002 Federal Register for this section (page 16981) clearly supports what BOLers are saying here in regard to counting Monday as a holiday for rescission. However, the last line states "...See Section 226.23(b)(1)(v). A creditor may extend the rescission period at its option." What does this mean? I don't see anything in the Reg or the Commentary that speaks to this statement.

    I'm trying to figure out why LaserPro is not counting Monday as a business day for rescission purposes. When I called Compliance Support I'm told this is determined by their Legal Dept, although they agreed to research it.

    Return to Top

    Moderator:  Andy_Z