The waiting periods for early disclosures and corrected disclosures; rescission period
With respect to the waiting period for the early disclosures (Truth-in-Lending [TILA] Statement), Regulation Z § 1026.19(a)(2)(i) provides that the creditor must deliver or place them in the mail not later than the seventh business day before consummation of the transaction. And, Section 1026.19(a)(2)(ii) provides that if the annual percentage rate (APR) becomes inaccurate, as defined in Regulation Z § 1026.22, the consumer must receive the corrected TILA Statement reflecting the changed terms no later than three business days before consummation. If the corrected disclosures are mailed to the consumer or delivered to the consumer by means other than personal delivery, the consumer is deemed to have received the corrected disclosures three business days after they are mailed or delivered.
With respect to the rescission period, Regulation Z § 1026.23(a)(3)(i) provides:
The consumer may exercise the right to rescind until midnight of the third business day following consummation, delivery of the notice required by Section 1026.23(b), or delivery of all material disclosures, whichever occurs last. If the required notice or material disclosures are not delivered, the right to rescind shall expire three years after consummation, upon transfer of all of the consumer's interest in the property, or upon sale of the property, whichever occurs first. In the case of certain administrative proceedings, the rescission period shall be extended in accordance with section 125(f) of the Act.
For purposes of the rescission period and waiting periods for the early and corrected disclosures, Regulation Z § 1026.2(a)(6) provides that a “business day” includes all calendar days, except Sundays and legal public holidays:
“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 §§ 1026.15 and 1026.23, and for purposes of §§ 1026.19(a)(1)(ii), 1026.19(a)(2), 1026.31, and 1026.46(d)(4), the term means all calendar days except Sundays and the legal public holidays specified in 5 U.S.C. 6103(a), such as 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.
The Official Staff Interpretations for Section 1026.2(a)(6) provides clarification that:
Four Federal legal holidays are identified in 5 U.S.C. 6103(a) by a specific date: New Year's Day, January 1; Independence Day, July 4; Veterans Day, November 11; and Christmas Day, December 25. 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.
Accordingly, Saturdays are to be counted in the rescission period and the waiting periods for the early and corrected disclosures unless a legal holiday falls on a Saturday. Additionally, if New Year's Day, Independence Day, Veterans Day, and Christmas Day fall on a Saturday, but these holidays are observed on a day other than Saturday or Sunday, then the day on which the holiday is observed shall be considered a business day.
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]