Ben Giumarra

A common question that seems to arise year after year is whether a state holiday, like Patriots Day, counts as a rescission day. Often as part of the inquiry the institution will consider whether they are actually open for business for not. What are the answers?

Yes, Patriots Day – or any other state holiday – is a business day for rescission purposes. The definition of “business day” that applies for counting rescission excludes only federal holidays (not state) and Sundays. All other days – no matter what’s going on – are counted as business days. Note that for these purposes, it doesn’t matter whether a financial institution is substantially open or not.

The regulation at 12 CFR 1026.32(a)(2) provides that a “consumer may exercise the right to rescind until midnight of the third business day following consummation.”

For these purposes, “business day” is defined in 1026.2(a)(6) as follows: “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 … the term means all calendar days except Sundays and the legal public holidays specified in 5 U.S.C. 6103(a).”

And when you pull up 5 USC 6103(a), you’ll find that only federal holidays are defined – this year that includes New Years, MLK Day, Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving and Christmas. No state stuff! Only federal holidays are not business days under the Generic Business Day definition. So Victory Day (Rhode Island), Patriots Day (Massachusetts), and Town Meeting Day and Bennington Battle Day (Vermont) are indeed business days.

The confusion surrounding this comes from two places. First, Massachusetts has its own Truth in Lending Act, which is where we find the rescission rules. Although it now defines “business day” to mirror the federal test, it didn’t always do so. Secondly, the poor imagination of those who write such regulations (although admittedly brilliant otherwise) use the term “business day” to mean different things in different contexts. Even within the Truth in Lending Act requirements, it is used in different ways.

If you’re thinking, “well gee, Ben, wish you’d written this article last week,” don’t worry – you’re still safe. If you’ve made a mistake and not counted Patriots Day towards rescission, all you’ve done is over-complied, i.e. given mortgage borrowers an extra day of rescission. Now, that’s not great, because the mortgage process is already long enough – people need the funds to disburse. But it shouldn’t be considered any violation.