Good afternoon —
The last-minute designation of Juneteenth as a federal holiday last Friday caused chaos for some lenders and title and settlement agents, resulting in closing delays as companies scrambled to adjust.
President Biden signed the bill into law on Thursday and made it effective for the next day, throwing a wrench in the federally mandated mortgage timelines that lenders and closing agents have to abide by. Changing the closing date can not only affect rate locks, which are based on calendar days, not business days, but also create a potential compliance issue when it comes to the right of rescission for refis and HELOCs.
On Friday morning, the FDIC instructed lenders to use their own best judgment in deciding whether to stay open on the federal holiday, which only complicated things. Here's the FDIC's helpful advice on the recission rule in particular: "Whether it will affect the rescission period for loans closed earlier this week (before the signing of the law) is uncertain."
The unexpected change-up put lenders and their closing partners in a tough spot, especially considering how regulation has ramped up under the Biden administration.
As Senior Mortgage Reporter Georgia Kromrei wrote: "Some loan officers decided to preemptively delay some closings, just in case regulators decide this is the perfect opportunity to crack down on compliance missteps. No one wants any additional attention from the newly invigorated CFPB."
One Louisiana-based loan officer said: "We had a closing scheduled for Monday, and Thursday afternoon I had to spring it on everybody that they made it a federal holiday, so we pushed it back. As soon as I saw the email I said, 'Well, I'm not going to wait for the verdict, because that means you can't count Saturday. I'm just going to push it.'"
As the last year has demonstrated, the mortgage industry can be quick on its feet to serve borrowers under rapidly changing conditions. Federal regulators should be just as quick to recognize how actions beyond the industry's control should not count against them as they made good-faith efforts to serve borrowers.
Until next week —
Sarah Wheeler
HousingWire Editor in Chief
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