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62 useful for mortgage lenders and servicers this year. TRUTH IN LENDING SIMPLIFICATION AND REFORM ACT Due to the implementation of the Truth in Lending Simplification and Reform Act in 1980 (94 Stat. 132 [1980], § VI; aka "TILA Reform Act"), the Federal Reserve Board was tasked with reforming Regulation Z in its entirety. As part of such reformation, the FRB finalized the basis of the precise day, which ultimately was a combination of the definition of "business day" within then-footnote 14 of 12 C.F.R. § 226.9 and the FRB's proposed definition in one of their proposed rules (from December 1980) for the TILA Reform Act (specifically 45 FR 80648 [1980]). As stated by the FRB, "[t]his definition provides a general rule applicable to most sections of the regulation and a special rule applicable only to the provisions on the right of rescission. e general rule, based on a creditor's normal operating schedule, is identical to the December proposal. It is substantially similar to its counterpart in Regulation E, which implements the Electronic Fund Transfer Act. e rule for transactions subject to the right of rescission is virtually identical to footnote 14 to § 226.9 of the current regulation. e Board believes, based on the comments [received], that transactions subject to the right of rescission need a more definite and uniform business day definition and that a separate definition for those cases is justified. us, it has adopted this two-tiered definition." (45 FR 20850 [1981]) e final rule adopted is substantially similar to today's "Business Day Rule": "'Business day' means a day on which a creditor's offices are open to the public for carrying on substantially all of its business functions. However, for purposes of rescission under §§ 226.15 and 226.23, 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, Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, anksgiving Day, and Christmas Day." (45 FR 20893 [1981]) Official Staff Commentary for this definition was proposed and finalized later in 1981. It comprised of two comments, the first for creditor business days and the other for precise days. Notably, the Commentary was originally proposed to be as follows (note the interrelation between the italicized parts): "1. Business function test. ere is no precise test for what constitutes 'substantially all' of a creditor's business functions. Factors that indicate that the creditor is open for business include the availability for personnel to make loan disbursements, to authorize credit transactions, or to handle credit transaction inquiries. Factors that indicate that the creditor is not fully open for business include the bank's customer service windows being open only for limited purposes, such as deposits and withdrawals, bill paying, and related services. 2. Rescission rule. A more precise rule (all calendar days except Sundays and federal legal holidays listed in 5 U.S.C. 6103(a)) applies when the rights of rescission is involved." (46 FR 28562 [1981]); emphasis added) However, the final Commentary removed the "there is no precise test" phrase used for the creditor business day but left the "more precise rule" for the precise business day definition (see 46 FR 50291 [1981]). Ultimately, this is how the precise day received its common name. SUBSEQUENT YEARS While the final administrative rules and official comments made due to the TILA Reform Act are fundamentally the same as they are now under 12 C.F.R. Pt. 1026, a notable difference is that the original Official Staff Commentary does not have the following from the current Commentary: ". . . 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." (12 C.F.R. Pt. 1026, Supp. I, Paragraph 2[a][6] – 2) On December 13, 2001, the FRB published a proposed revision to their Commentary to (inter alia) "provide guidance … on the definition of 'business day' for purposes of the right to rescind certain home-secured loans." (66 FR 64381 [2001]) e FRB stated the following: "Generally, when consumers have a right to rescind a home-secured loan, they may exercise the right until midnight of the third business day following consummation or the delivery of certain disclosures, whichever occurs last. Comment 2(a)(6) – 2 provides that for purposes of rescission, 'business day' means all calendar days except Sundays and the federal legal holidays listed in 5 U.S.C. 6103(a). Four legal holidays are identified in that statute by a specific date. Independence Day, July 4, is one example. e comment would be revised to clarify that only the date specified in the statute is considered a legal holiday for purposes of rescission. e proposed comment identifies the four legal holidays in 5 U.S.C. 6103(a) that are defined by a specific date, and provides an example to aid in compliance …." (46 FR 64381 [2001]; emphasis added) In 2002, the FRB finalized their proposed revisions without alteration. In addition to reiterating the above paragraph, the FRB provided the following: "Comments on this proposal were about evenly divided. Several industry trade associations supported the proposal. Some consumer advocates and a few commenters representing small financial institutions were concerned that confusion would result if weekdays observed as holidays are considered business days. Some commenters expressed concern that consumers might lose a day of their rescission period if they are unable to postmark or otherwise deliver their written notice of rescission on weekdays observed as holidays. e comment is being adopted as proposed. e comment does not represent a new rule, but merely restates and clarifies the requirement contained in section 226.2(a)(6) of the regulation. Consumers' ability to exercise their right to rescind is not affected because consumers Feature By: Timothy A. Raty

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