CFPB Issues Interpretive Rule on Juneteenth 2021

The Consumer Financial Protection Bureau released an interpretive rule on Aug. 5 to assist the mortgage industry in determining whether to treat June 19, 2021, as a federal holiday for the purposes of compliance with Regulation Z mortgage timing requirements.

On June 17, President Biden signed Juneteenth into law as a federal holiday. The quick enactment created interpretive questions and compliance challenges for the mortgage industry with respect to the rescission of closed-end mortgages and certain time-sensitive mortgage disclosures.

The interpretive rule explains these timing requirements in light of recent legislation that designated “Juneteenth National Independence Day, June 19” (Juneteenth) as a Federal legal public holiday. It clarifies that, if the relevant closed-end rescission or TRID time period began on or before June 17, then June 19 was considered a business day, but nothing prohibits creditors from providing longer time periods. Therefore, it would also be compliant for creditors to have considered June 19 a Federal holiday for purposes of these provisions.

Question of the Week

Q. Can the credit union put a hold on funds from a deposited check after the date of deposit if there is reason to believe the check will not clear?

A. Yes, a hold can be placed if the credit union has reasonable cause to believe it will not have the ability to collect on the deposited check. Reasonable cause requires that facts exist that would cause a well-grounded belief by a reasonable person.

If there is reasonable cause and the credit union puts a hold on the funds, the credit union must provide the depositor with written notice, generally at the time of deposit. However, if the credit union becomes aware of information after the check is deposited causing them to doubt that the check will clear, the credit union can mail or deliver the notice within the first business day following the day the facts become known. The notice must include:

  • A number or code, not to exceed four digits, that identifies the customer’s account;
  • The date of the deposit;
  • The amount of the deposit that is being delayed;
  • The reason the exception was invoked; and
  • The time period within which the funds will be available for withdrawal.

Related Link

12 CFR 229.13

Compliance Alerts

National Credit Union Administration

Capitalization of Unpaid Interest: The NCUA issued Letter to Credit Unions 21-CU-07 which provides details on the NCUA lifting the prohibition of capitalization of interest in connection with loan workouts and modifications.  The Letter covers consumer protection considerations and credit risk considerations.

Permissible Loan Interest Rate Ceiling Extended: The NCUA Board extended the current 18% rate ceiling for loans made by federal credit unions through March 10, 2023.

Consumer Financial Protection Bureau

CFPB Updates Mortgage Servicing Small Entity Compliance Guide: The CFPB released updates to the Mortgage Servicing Small Entity Compliance Guide to incorporate references to the recent changes to the Mortgage Servicing Rules.  The updates provide an overview of the 2021 Mortgage Servicing COVID-19 Final Rule and the 2020 Mortgage Servicing Interim Final Rule Provisions.

CFPB Issues Interpretive Rule on Certain Mortgage and Disclosure Timing Requirements for the 2021 Juneteenth Federal Holiday: The CFPB released an interpretive rule regarding Regulation Z timing requirements and the treatment of June 19 as a federal holiday or a business day for purposes of compliance with certain time-sensitive borrower protections.

Office of Foreign Assets Control

OFAC has updated the SDN list as of July 22. The last update prior to this was July 2.

Questions? Contact the Compliance Hotline: 1.800.546.4465; compliance@nwcua.org.

Posted in Compliance, Compliance News, Compliance Question.