What is a Business Day?

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The Truth in Lending Act contains numerous deadlines, timelines, and other important and sensitive dates to keep track of. 

The term “business day” appears frequently in the law.  Business days are Monday through Friday, right?  Nope, wrong.  Under TILA, there are two definitions.  Under the first, more general term, a business day is “a day on which the creditor’s offices are open to the public for carrying on substantially all of its business functions.”  So, any day a consumer can walk up to the office and the lights are on and people are working, that’s a business day.  But, for some purposes, a business day is all calendar days except Sundays and federal holidays.  This definition applies to time limits and deadlines involving business days in the following situations:

  • §226.15 and §226.23 – Consumer rescissions.  In both open and closed-end credit transcations, the consumer has a right to rescind within three business days after either: 1) the last delivery of notice or disclosures (open ended); or 2) after consummation, or delivery of the notice or material disclosures, whichever occurs latest (for closed-ended).
  • §226.31 – Disclosures for reverse mortgages.  Creditors involved in these transactions must send out Good Faith Estimates within three business days after receiving the consumer’s application.  In addition, the GFEs must be delivered or placed in the mail no later than seven business days before binding the consumer to the contract.  If the GFEs are placed in the mail, the law presumes that consumer receives them three business days later.
  • §226.19 – Disclosures for mortgages on real property.  Under the new rules, the revised TILA-RESPA forms must be used.  The Loan Estimate form must be provided to the consumer no more than three business days after the loan application is received.  If there is a change in circumstances, the creditor must provide the revised form within three business days, and must provide it no later than seven business days before the loan transaction is consummated.
  • §226.20 – Cancellation of escrow accounts.  If the consumer requests the escrow account be cancelled, the creditor/servicer must make sure the consumer gets the proper disclosures at least three days prior to cancelling the account.
  • §226.32 – High-cost mortgages.  For these mortgages (8% interest and higher), the creditor must give the consumer disclosures at least three days before the consumer would be bound by the transaction, or before an account is opened for the mortgage.  If any changes occur that make the disclosures inaccurate, the creditor must provide new, revised disclosures.

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