By: Paulette Price
On June 17, 2021, President Joe Biden signed Senate Bill S.4751 which establishes June 19th as a legal public holiday to be named Juneteenth National Independence Day.
Juneteenth is the first new federal holiday since Martin Luther King Jr. Day was adopted in 1983. With Juneteenth’s adoption as a holiday, it is important to understand the historical significance of Juneteenth, and how it will impact the real estate industry going forward.
History of Juneteenth
The Emancipation Proclamation was issued on September 22, 1862, by Abraham Lincoln, and was effective on January 1, 1863. In 1863 the US was still entrenched in the Civil War, and implementation in areas that were still under Confederate control was not possible. After the Civil War ended on April 9, 1865, enforcement of the Emancipation Proclamation was slow and inconsistent as the enforcement typically relied upon the presence of Union troops. Texas, being the most remote state of the former Confederacy, was the last state to do away with institutional slavery. On June 19, 1865, U.S Army troops landed in Galveston, Texas. This is when the last of the enslaved Americans were informed of their freedom by Union General Gordon Granger, who delivered General Order No.3, enforcing the Emancipation Proclamation, and declaring freedom for slaves of the rebels in the South.
The announcement and Granger’s enforcement of the order is the central event commemorated by the holiday of Juneteenth, which originally celebrated the end of slavery in Texas.
Impact of Juneteenth on Real Estate Transactions
The addition of a federal holiday has far-reaching impacts on the legal and regulatory compliance of residential real estate transactions. Upon the announcement of the added holiday, many mortgage industry professionals were doing damage control — delaying closings, pushing back notices, and modifying loans. Bill S.475 amends Section 6103(a) of Title 5 of the United States Code by inserting “Juneteenth National Independence Day, June 19” immediately following Memorial Day. Because Bill S.475 doesn’t specify an effective date, it became effective immediately. Since TILA and Regulation Z both rely on the definition of a “day” to ensure compliance with disclosure timing requirements, Juneteenth’s impact on the definition of “business day” under TILA and Regulation Z meant that there were immediate compliance concerns for federal and state-required disclosures.
12 C.F.R. § 1026.2(a)(6) contains two different business day variations; “general business days” and “specific business days.” General business days are defined to mean any day on which the creditor’s offices are open to the public for carrying on substantially all its business functions. Specific business days are defined to mean all calendar days except Sundays and the legal public holidays listed in 5 U.S.C. § 6103(a). These specified legal public holidays are 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, as of June 17, 2021, Juneteenth National Independence Day.
The specific business day definition is used to determine several time periods in Regulation Z, including the following:
- The right of rescission for both closed-end and open-end transactions. [12 C.F.R. §§ 1026.23 & 1026.15]
- The seven-business day waiting period between delivery of the initial Loan Estimate and consummation. [12 C.F.R. § 1026.19(e)(1)(iii)(B)]
- Application of the mailbox rule to Loan Estimate delivery. [12 C.F.R. § 1026.19(e)(1)(iv)]
- Receipt of the Loan Estimate and intent to proceed to impose fees. [12 C.F.R. § 1026.19(e)(2)(i)(A)]
- Receipt of revised Loan Estimate and mailbox rule for receipt of revised Loan Estimate. [12 C.F.R. § 1026.19(e)(4)(ii)]
- Receipt of Closing disclosure three business days before consummation. [12 C.F.R. § 1026.19(f)(1)(iii)]
- Application of the mailbox rule for Closing Disclosure delivery. [12 C.F.R. § 1026.19(f)(1)(ii)]
- High-cost mortgage disclosure timing requirements. [12 C.F.R. § 1026.31(c)]
When a federal holiday as defined in 5 U.S.C. § 6103(a) falls on a weekend, the Supplement I to Part 1026 further directs the way the precise business day rule is to be applied:
“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.”
Since Juneteenth is a federal holiday identified by a specific date, in cases where the more precise business day rule applies, Friday, June 18th is a business day, and Saturday, June 19th is the federal legal holiday which does not count as a business day. This rule applies to 1) Closing Disclosures, 2) Right of Rescission, 3) the 7-day waiting period after the Loan Estimate has been disclosed, and 4) Escrow Closing Notices.
For the regular business day rule, Saturday, June 19th may or may not be a business day depending on whether “the creditor’s offices are open to the public for carrying on substantially all of its business functions.” This rule applies to 1) the 3-day delivery requirement for the Loan Estimate, 2) revised Loan Estimates, 3) the Written List of Providers, and 4) Special Information Booklets.
Keeping in mind the limited time in which the industry had to respond and make adjustments to closing dates on June 18, Acting CFPB Director Uejio issued a statement that first addresses the significance of the new holiday, and then addresses the TILA timing issue as follows:
“The CFPB, along with the other Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) regulators, is aware of concerns regarding the implementation of the new Juneteenth Federal holiday, particularly as it relates to mortgage lender compliance with the Truth in Lending Act and TILA-RESPA Integrated Disclosure (TRID) timing requirements. The CFPB recognizes that some lenders did not have sufficient time after the Federal holiday declaration to consider whether and how to adjust closing timelines. The CFPB understands that some lenders may delay closings to accommodate the re-issuance of disclosures adjusted for the new Federal holiday. The CFPB notes that the TILA and TRID requirements generally protect creditors from liability for bona fide errors and permit redisclosure after closing to correct errors. Any guidance ultimately issued by the CFPB would take into account the limited implementation period before the holiday and would be issued after consultation with the other FIRREA regulators and the Conference of State Bank Supervisors (CSBS) to ensure consistency of interpretation for all regulated entities.”2
A “bona fide error” is defined pursuant to 15 U.S. Code § 1640(c):
“A creditor or assignee may not be held liable in any action brought under this section or section 1635 of this title for a violation of this subchapter if the creditor or assignee shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.”
Since this does not present a cure for the underlying issue when TILA compliance problems are identified, investors will typically not agree to purchase the loans in question. The CFPB suggestion of examiner leniency is a far cry from a guarantee for protection from civil liabilities.
Declaring a federal holiday with such little lead time is unprecedented. Thus far the regulatory guidance has been minimal, leading to a great many questions for which we are still awaiting answers. The result has been confusion in the industry. Most lenders responded by providing revised disclosures and delaying closings, to the detriment of many consumers.
 Sen. Markey, Edward J. [D-MA] (2021, June 17). S.475 – 117th Congress (2021-2022): Juneteenth National Independence Day Act. Congress.gov. [https://www.congress.gov/bill/117th-congress/senate-bill/475]
 From Statement by CFPB Acting Director Dave Uejio on Impact of the Juneteenth National Independence Day Federal Holiday on Residential Mortgage Closings. Consumer Financial Protection Bureau CFPB (2021, June 18). [https://www.consumerfinance.gov/about-us/newsroom/statement-by-cfpb-acting-director-dave-uejio-on-impact-of-juneteenth-on-residential-mortgage-closings/]