Posted by Anthony Demangone
When navigating a new regulatory requirement, do not overlook definitions. With the Reg Z changes that implement HOEPA, there was a tweak of the definition of "business day." This is important because the HOEPA changes create new requirements for early disclosures.
The final HOEPA rule was designed to expand upon Regulation Z's requirements to require early TILA disclosures for certain mortgage loans. In addition, a new requirement will prohibit a lender or any person from collecting a fee, other than a credit report fee, from a borrower until after the borrower has received the early TILA disclosures. For mailed disclosures, the lender may assume that the disclosures have been received three business days after mailing and assess a fee at that time.
Does this sound familiar? It should. MDIA did the same thing. Only sooner. If you recall, after the Fed issued the HOEPA regs that we are discussing, Congress passed the Mortgage Disclosures Improvements Act, which pushed up (and expanded) some of the HOEPA requirements. If it sounds confusing, it is. But here's the point I am trying to make: when MDIA or HOEPA talks about days or business days, be sure you understand what they mean. Because it can mean two things, depending on the situation.
Under the standard definition, a 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, a ‘‘business day’’ means all calendar days except Sundays and specified legal public holidays.The definition of ‘‘business day’’ is being revised to apply the second definition of business day to the consumer’s receipt of early mortgage loan disclosures under § 226.19(a)(1)(ii). The Board believes that the definition of business day that excludes Sundays and legal public holidays is more appropriate because consumers should not be presumed to have received disclosures in the mail on a day on which there is no mail delivery.
So, as you work through the HOEPA (and review MDIA) requirements, don't forget to note that business day has a very specific meaning. The devil is in the details, or definition section, many times.
Here are some odds and ends.
- You may have noticed already, but the NAFCU Compliance Blog has surpassed 1,000 subscribers. Did you hear that sound? It was us patting ourselves on the back. :) All kidding aside, we have a lot of fun with this, and we appreciate that you choose to read what we have to say.
- NAFCU's August Flash Report is available. (NAFCU log-in needed.) Many folks do not know that NAFCU has a team of economists that do a BUNCH of stuff. One of the things they do is issue a monthly Flash Report, which summarizes the results of a member survey. The August issue, linked above, looks at regulatory burden. From a compliance perspective, it is fairly interesting. For example...(a)lmost all participating credit unions said that they would expect their regulatory burden to increase should the June 30th proposal for a consumer finance protection agency come into effect. The rough estimate respondents stated of their credit union’s annual regulatory costs due to a duplicate agency was an average of $45,120.
Remember when I wrote about how GAO wasn't overly pleased with how fair lending regs are being enforced? Well, on August 4, the FFIEC did release new fair lending exam procedures. I would glance through this doc if you are in lending.