TRID Timing and Christmas/NYE Holidays this Year
This is our first year with the TILA-RESPA Integrated Disclosures and we don't want anyone to miss a deadline for Loan Estimate or Closing Disclosure because of special timing requirements. So let's discuss how TRID timing will affect us this year.
Both Christmas and New Year's Day fall on a Sunday this year, meaning the observed Federal holiday in both cases is the following Monday: December 26th and January 2nd. See official list here.
I'm sure most are closed, but I suppose some lending institutions may be open those two Mondays. Either way there are some complications around counting these as business days: Do we count Monday as a "business day"? Do we essentially double-count Christmas as two non-business days? Does it matter if we're not open for business? This issue has been buzzing around lately because, I believe, the TRID rules use different definitions for "business day" in different parts of this regulation. Let's straighten things out.
"Business Day"-related Timing Requirements
So first a quick recap of all the different timing requirements that depend on the term "business day" (with the most important/common ones in bold):
Deliver a Loan Estimate within 3 business days of receiving an application
Honor an LE for a minimum of 10 business days (in other words, the LE can expire after 10 business days without an intent to proceed)
We can't close until 7 business days after the borrower has received the initial LE
Under the Mailbox Rule, we assume the borrower received a mailed disclosure 3 business days after putting it in the mail
Redisclose an LE (or in some cases a Closing Disclosure) within 3 business days of a valid changed circumstance
Within 4 business days of closing, you can use a CD to increase fees with a valid changed circumstance (instead of using an LE, as usually required)
We must wait 3 business days to close after the borrower receives the initial CD
A non-TRID (but still important) rule related to this is the 3-business- day rescission period post-closing
"Business Day" - Different Definitions
Now let's look at the two different TILA definitions of "business day" (we could explain the logic behind this and how it's actually good for lenders, but this is a newsletter not a dissertation). Check out 12 CFR 1026.2(a)(6) and Comment 2. to read the actual regulation.
Here they are:
General Business Day - Any day on which the institution is open to the public for carrying on substantially all of its business functions. So if you're a mortgage company that's not disclosing on Monday, then this will not count as a general business day. If you're a bank with branches open for a part of the day for check-cashing and withdrawals, but most other services are not offered, then this would not be a general business day for you. So whether Monday Dec. 26th or Monday Jan. 2nd count as "general business days" will DEPEND on whether you are substantially open to to the public. Are you? (Likely not.)
Specific Business Day - All calendar days except Federal legal holidays count as "specific business days". This includes New Year's Day, Christmas, MLK, etc. (see here for full list). But this does not apply to observed Federal holidays, which do count as specific business days under this test. So both Monday Dec. 26th and Monday Jan. 2nd WILL count as business days under this test.
Summary & Examples
So looking at some of the important timing requirements (see my quick list above), here's how this applies:
3-Day Loan Estimate Rule: Do NOT count Dec. 26th or Jan. 2nd as a business day (unless you happen to be open). General Business Day definition.
3-Day Closing Disclosure Rule: DO count Dec. 26th and Jan. 2nd as a business day (regardless of whether you're open or not). Specific Business Day definition.
3-Day Rescission Period: DO count Dec. 26th and Jan. 2nd as a business day (regardless of whether you're open or not). Specific Business Day definition.
Example from Regulation
This is the example that got everyone confused because they only addressed holidays that fall on Saturdays, not Sundays.
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). In cases where the more precise rule applies, the observed holiday (in the example, July 3) is a business day
Closing Disclosure Example
Borrower receives Closing Disclosure on Friday December 23rd. This loan can close as soon as December 27th because Saturday (24), Monday (26), and Tuesday (27) are "business days" under the Specific Test.
Loan Estimate Example
Lender receives mortgage application on Friday December 23rd. Assuming you are not open on Saturday or Monday (observed Christmas holiday) your deadline for mailing a Loan Estimate is December 29th because Saturday, Sunday, and Monday are not business days under the "General Test."
In Other News
Remember the newsletter where we discussed the costs/benefits of working with now-legal-in-Mass. marijuana dispensaries (and employees)? Well we understood the compliance burden, but the benefits seemed hard to pin down. Interesting to now see that in Washington State (legalized in 2012), marijuana sales have almost matched liquor sales at $200+ million per quarter. The New York Times reported that the Mass. marijuana industry may reach $1 billion in 20 years, comparing it to Colorado which had $996 million in revenue last year.
How much progress have you made towards Fannie Mae's reporting requirements, kicking in February 1st?
I hope you'll allow me a couple of self-serving comments today:
First, we have a couple of good people coming off assignments to be available soon - whether you need someone in-house to help with underwriting, closing, compliance, or HMDA reviews - you should give us a call to discuss.
Second, for any clients with Encompass LOS, we're starting to get excited here about Encompass's new Consumer Connect offering - and we're making plans to be on the cutting edge of things. (and, of course, by "we" I really mean Lance McGrath and Paul Bates, who I'd be happy to put you in touch with!)
Have you read why IBM switched to Mac computers? We remember when a majority of U.S. businesses, very quickly, switched from Blackberries to iPhones. Will Apple suddenly take over the business computer market too?
Let's consider some of IBM's points (article here). They had 90,000 employees switch to apple computers. Five percent of employees with Apple computers needed to call IBM's IT department, as opposed to 40% with PC. IBM reportedly employed only 25 people to manage 30,000 Apple computers! They say cost savings is as much as $535 per computer over four years (despite Apple computers being generally more expensive to purchase).
Interestingly, it appears IBM stumbled upon the improved performance when it allowed some employees to choose whether to use Apple or PC computers. They then started to realize how much cheaper they were to run. (73% of employees chose Apple when given the chance!)
"If the rate of change on the outside exceeds the rate of change on the inside, the end is near."
- Jack Welch
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