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During the ABA’s recent Mortgage Compliance Q&A call with the CFPB, the CFPB responded to a question by telling us to “check state law.” The question was how to define a “business day” for purposes of the 3-day requirement in Regulation B. – IBA Compliance Connection

IBA Compliance Connection

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During the ABA’s recent Mortgage Compliance Q&A call with the CFPB, the CFPB responded to a question by telling us to “check state law.” The question was how to define a “business day” for purposes of the 3-day requirement in Regulation B.

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The new Regulation B appraisal rule requires banks to provide a copy of an appraisal or valuation “promptly upon completion, or three business days prior to consummation of the transaction (for closed-end credit) or account opening (for open-end credit), whichever is earlier.” 12 CFR 1002.14(a)(1). The CFPB also acknowledged the lack of a definition of “business day” in its Small Entity Compliance Guide for the rule (on page 15). Notwithstanding what was stated on the ABA call, we believe that you can rely on the CFPB’s guidance, as explained below, and you do not need to refer to state law for a definition of “business day.”

The CFPB guide states that you may use any reasonable definition of “business day.” For example, you could adopt the Regulation Z definition of “business day” that includes Saturdays (which is one of two definitions of “business day” that could apply under Regulation Z):

“The ECOA Valuations Rule does not provide a definition of ‘business days’ for purposes of the timing of the consumer notice and for providing copies of appraisals and other written valuations.

“For loans covered by the HPML Appraisal Rule, consult the Bureau’s Small Entity Compliance Guide: TILA Higher-Priced Mortgage Loans Appraisal Rule.

“For other loans, you can apply your own reasonable definition, which may include counting Saturdays — as provided, for example, in the alternative definition in Regulation Z, § 1026.2(a)(6).”

However, if the loan is a higher-priced mortgage loan (HPML), then the delivery requirements in Regulation Z will instead apply (as explained in the Small Entity Compliance Guide for the HPML appraisal requirements (page 15)). Under the HPML requirements, a “business day” is defined as a day when “the creditor’s offices are open to the public for carrying on substantially all of its business functions.” 12 CFR 1026.2(a)(6).