VIDEO: Closing a Loan on a Non-Business Day
In this Compliance Clip (video), Adam answers a recent question he received regarding closing a loan on a day that is not considered a business day under the general definition of a business day in Regulation Z.
Video Transcript
The following is a transcript of this video.
This Compliance Clip is going to talk about closing alone on a non-business day. Just this week, I received this question. It said this: Question regarding the date of a loan. Can we sign a closing package on a Saturday? Our bank is open for minimal services on Saturdays. It is a right of rescission transaction, so disbursement would be on a regular business day.
As far as the answer to this, we're gonna just have a little discussion and then take a look at the commentary to Regulation Z. Now, first and foremost, what I understand from this question is that this is a right of rescission transaction, and the disbursement is gonna be on a regular business day during the week. But you're asking about whether you can close on a Saturday because that's not normally a regular business day for you, since you're only open for minimal services on Saturday. In other words, under the general definition of a business day, Saturday does not count. So your question is, can we close this loan on a Saturday?
The answer is yes. You can close the loan on any day. You could theoretically close it on Sunday. But the right of rescission does not count unless it is considered a business day. So of course, you're not gonna count the day you close the loan and you're not gonna count Sunday. But what you're gonna count is the rescission after you closed the loan, the number of business days after you closed the loan.
I just mentioned the general definition of a business day because that's what you're referencing. But I wanna point out that the right of rescission applies to the precise definition of a business day. So when we're talking about a business day, there's two definitions. There's a general business day that may or may not include Saturdays, but for right of rescission, there is a precise definition, and the commentary explains it this way. It says, “A more precise rule for what is a business day, which is all calendar days except Sundays and the federal legal holidays, applies when the right of rescission is involved.” Really, the bottom line is it doesn't matter what day you closed the loan because the right of rescission is still gonna be counted based on the precise definition of a business day.
I hope that answers your question and for the rest of you, that's it for this Compliance Clip.