To achieve an annual savings of $2 billion, the U.S. Postal Service announced on Feb. 6, 2013, a new six-day package delivery and five-day mail delivery schedule, effective the week of Aug. 5, 2013. Mail addressed to street addresses will be delivered Monday through Friday only. However, mail addressed to P.O. Boxes may be picked up at post offices that are open on Saturdays.
In response to this announcement, you may be wondering whether the timing requirements for purposes of the consumer’s rescission period under the Truth-in-Lending Act (TILA) and delivery of the disclosures under the Real Estate Settlement Procedures Act (RESPA) and Mortgage Disclosure Improvement Act (MDIA) would be affected. In other words, will Saturdays be excluded from the timing requirements once the Postal Service ceases to deliver mail on Saturdays?
The short answer to this question is “No changes … yet.” Unless the implementing regulations for TILA, RESPA and/or the MDIA are amended to exclude Saturdays, or additional guidance is provided by the Consumer Financial Protection Bureau (CFPB), Saturdays shall continue to be counted for determining the rescission period and the waiting periods for early disclosures and corrected disclosures. If a lender or broker is open to the public for carrying on substantially all of the entity's business function on Saturdays, then Saturdays will continue to be counted in the three-day delivery requirement for the GFE and initial TIL.
Good Faith Estimate
Regulation Z § 1026.19(a) and § 1024.7(a) each provide that the Goof Faith Estimate (GFE) must be delivered to the consumer or placed in the mail no later than the third business day after the creditor receives the consumer's written application. What does “business day” mean for purposes of the GFE? Regulation X § 1024.2(b) provides that:
Business day means a day on which the offices of the business entity are open to the public for carrying on substantially all of the entity's business functions.
The Official Staff Interpretations for Section 1026.2(a)(6) clarifies what “carrying on substantially of the entity’s business functions” means by offering a “business function test”:
►Business function test: Activities that indicate that the creditor is open for substantially all of its business functions include the availability of personnel to make loan disbursements, to open new accounts, and to handle credit transaction inquiries. Activities that indicate that the creditor is not open for substantially all of its business functions include a retailer's merely accepting credit cards for purchases or a bank's having its customer-service windows open only for limited purposes such as deposits and withdrawals, bill paying, and related services.
Accordingly, if a creditor is open to the public on Saturdays to carry on substantially all of its business functions, then Saturdays would be counted in the three-day rule for delivering the GFE. Otherwise, Saturday would not be counted.
More detail on the required timeframes associated with the rescission period and the disclosures will appear in a second part of this article.
Melanie A. Feliciano Esq. is DocMagic Inc.’s chief legal officer and currently serves as editor-in-chief of DocMagic’s electronic compliance newsletter, The Compliance Wizard. She received her JD from the Georgetown University Law Center, and is licensed in California and Texas. She may be reached by phone at (800) 649-1362 or e-mail
[email protected].
