Truth in Lending, 35722-35723 [2011-15178]

Download as PDF 35722 Federal Register / Vol. 76, No. 118 / Monday, June 20, 2011 / Rules and Regulations The addition reads as follows: FOR FURTHER INFORMATION CONTACT: Supplement I to Part 213—Official Staff Interpretations * * * * * Subpart A—General * * * * * § 213.2—Definitions * * * * * 2(e) Consumer Lease. 9. Threshold amount. * * * * * * * * iii. From January 1, 2012 through December 31, 2012, the threshold amount is $51,800. * * * * * By order of the Board of Governors of the Federal Reserve System, June 13, 2011. Jennifer J. Johnson, Secretary of the Board. [FR Doc. 2011–15180 Filed 6–17–11; 8:45 am] BILLING CODE 6210–01–P FEDERAL RESERVE SYSTEM 12 CFR Part 226 [Regulation Z; Docket No. R–1424] Truth in Lending Board of Governors of the Federal Reserve System. ACTION: Final rule, staff commentary. AGENCY: The Board is publishing a final rule amending the staff commentary that interprets the requirements of Regulation Z, which implements the Truth in Lending Act (TILA). Effective July 21, 2011, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amends TILA by increasing the threshold for exempt consumer credit transactions from $25,000 to $50,000. In addition, the Dodd-Frank Act requires that this threshold be adjusted annually by any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI–W). Accordingly, based on the annual percentage increase in the CPI– W as of June 1, 2011, the Board is adjusting the exemption threshold from $50,000 to $51,800, effective January 1, 2012. Because the Dodd-Frank Act also requires similar adjustments in the Consumer Leasing Act’s threshold for exempt consumer leases, the Board is making similar amendments to Regulation M elsewhere in today’s Federal Register. DATES: This final rule is effective January 1, 2012. mstockstill on DSK4VPTVN1PROD with RULES SUMMARY: VerDate Mar<15>2010 16:50 Jun 17, 2011 Jkt 223001 Lorna M. Neill, Senior Attorney, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, at (202) 452– 3667 or 452–2412; for users of Telecommunications Device for the Deaf (TDD) only, contact (202) 263–4869. SUPPLEMENTARY INFORMATION: I. Background Effective July 21, 2011, the DoddFrank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) increases the threshold in the Truth in Lending Act (TILA) for exempt consumer credit transactions from $25,000 to $50,000. Public Law 111–203 § 1100E, 124 Stat. 1376 (2010). In addition, the Dodd-Frank Act requires that this threshold be adjusted annually for inflation by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI–W), as published by the Bureau of Labor Statistics. In April 2011, the Board issued a final rule amending Regulation Z (which implements TILA) consistent with these provisions of the Dodd-Frank Act. 76 FR 18354 (Apr. 4, 2011). As amended, § 226.3(b)(1)(ii) of Regulation Z provides that the exemption threshold will be adjusted annually effective January 1 of each year based on any annual percentage increase in the CPI–W that was in effect on the preceding June 1. Furthermore, any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI–W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI–W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900. See comment 3(b)–1. II. Adjustment and Commentary Revision Effective January 1, 2012, the adjusted exemption threshold amount is $51,800. This adjustment is based on the CPI–W index in effect on June 1, 2011, which was reported on May 13, 2011. The Bureau of Labor Statistics publishes consumer-based indices monthly, but does not report a CPI change on June 1; adjustments are reported in the middle of the month. The CPI–W is a subset of the CPI–U index (based on all urban consumers) and represents approximately 32 percent of the U.S. population. The adjustment reflects a 3.6 percent increase in the CPI–W from April 2010 to April 2011 and is rounded PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 to the nearest $100 increment. Accordingly, the Board is revising comment 3(b)–1 (as amended effective July 21, 2011) to add a new subparagraph 3(b)–1.iii stating that, from January 1, 2012 through December 31, 2012, the threshold amount is $51,800. This revision is effective January 1, 2012. Under the Administrative Procedures Act, notice and opportunity for public comment are not required if the Board finds that notice and public comment are unnecessary. 5 U.S.C. 553(b)(B). This annual adjustment is required by statute. The amendment in this notice is technical and applies the method previously established in Regulation Z for determining any adjustments to the exemption threshold. For these reasons, the Board has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary. Therefore, the amendment is adopted in final form. III. Regulatory Flexibility Analysis The Board certifies that this amendment to Regulation Z will not have a significant economic impact on a substantial number of small entities. The only change is to adjust the exemption threshold to reflect any annual percentage increase in the CPI– W. This change is required by statute. In addition, the Board believes that this amendment will not have a significant impact on a substantial number of small entities for the reasons stated in its April 2011 final rule. See 76 FR 18354, 18360–61. List of Subjects in 12 CFR Part 226 Advertising, Consumer protection, Federal Reserve System, Reporting and recordkeeping requirements, Truth in Lending. Text of Final Revisions For the reasons set forth in the preamble, the Board amends Regulation Z, 12 CFR part 226, as set forth below: PART 226—TRUTH IN LENDING (REGULATION Z) 1. The authority citation for part 226 continues to read as follows: ■ Authority: 12 U.S.C. 3806; 15 U.S.C. 1604, 1637(c)(5), and 1639(l); Pub. L. 111–24 § 2, 123 Stat. 1734; Pub. L. 111–203, 124 Stat. 1376. Subpart B—Open-End Credit 2. In Supplement I to Part 226 as amended effective July 21, 2011 in 76 FR 18354 (Apr. 4, 2011), under Section 226.3—Exempt Transactions, under 3(b) ■ E:\FR\FM\20JNR1.SGM 20JNR1 Federal Register / Vol. 76, No. 118 / Monday, June 20, 2011 / Rules and Regulations Credit over applicable threshold amount, paragraph 1.iii is added effective January 1, 2012. The addition reads as follows: Supplement I to Part 226—Official Staff Interpretations * * * * * Subpart A—General * * * * * § 226.3—Exempt Transactions * * * * * 3(b) Credit over applicable threshold amount. 1. Threshold amount. * * * * * * * * iii. From January 1, 2012 through December 31, 2012, the threshold amount is $51,800. * * * * * By order of the Board of Governors of the Federal Reserve System, June 13, 2011. Jennifer J. Johnson, Secretary of the Board. [FR Doc. 2011–15178 Filed 6–17–11; 8:45 am] BILLING CODE 6210–01–P FEDERAL RESERVE SYSTEM 12 CFR Part 226 [Regulation Z; Docket No. R–1422] Truth in Lending Board of Governors of the Federal Reserve System. ACTION: Final rule; staff commentary. AGENCY: The Board is publishing a final rule amending the staff commentary that interprets the requirements of Regulation Z (Truth in Lending). The Board is required to adjust annually the dollar amount that triggers requirements for certain home mortgage loans bearing fees above a certain amount. The Home Ownership and Equity Protection Act of 1994 (HOEPA) sets forth rules for homesecured loans in which the total points and fees payable by the consumer at or before loan consummation exceed the greater of $400 or 8 percent of the total loan amount. In keeping with the statute, the Board has annually adjusted the $400 amount based on the annual percentage change reflected in the Consumer Price Index as reported on June 1. The adjusted dollar amount for 2012 is $611. DATES: Effective Date: January 1, 2012. FOR FURTHER INFORMATION CONTACT: Nikita M. Pastor, Senior Attorney, Division of Consumer and Community Affairs, Board of Governors of the mstockstill on DSK4VPTVN1PROD with RULES SUMMARY: VerDate Mar<15>2010 16:50 Jun 17, 2011 Jkt 223001 Federal Reserve System, at (202) 452– 3667. For the users of Telecommunications Device for the Deaf (‘‘TDD’’) only, contact (202) 263–4869. SUPPLEMENTARY INFORMATION: I. Background The Truth in Lending Act (TILA; 15 U.S.C. 1601–1666j) requires creditors to disclose credit terms and the cost of consumer credit as an annual percentage rate. The act requires additional disclosures for loans secured by a consumer’s home, and permits consumers to cancel certain transactions that involve their principal dwelling. TILA is implemented by the Board’s Regulation Z (12 CFR part 226). The Board’s official staff commentary (12 CFR part 226 (Supp. I)) interprets the regulation, and provides guidance to creditors in applying the regulation to specific transactions. In 1995, the Board published amendments to Regulation Z implementing HOEPA, contained in the Riegle Community Development and Regulatory Improvement Act of 1994, Public Law 103–325, 108 Stat. 2160 (60 FR 15463). These amendments, contained in §§ 226.32 and 226.34 of the regulation, impose substantive limitations and additional disclosure requirements on certain closed-end home mortgage loans bearing rates or fees above a certain percentage or amount. As enacted, the statute requires creditors to comply with the HOEPA requirements if the total points and fees payable by the consumer at or before loan consummation exceed the greater of $400 or 8 percent of the total loan amount. TILA and Regulation Z provide that the $400 figure shall be adjusted annually on January 1 by the annual percentage change in the Consumer Price Index (CPI) that was reported on the preceding June 1. 15 U.S.C. 1602(aa)(3) and 12 CFR 226.32(a)(1)(ii). The Board adjusted the $400 amount to $592 for the year 2011. The Bureau of Labor Statistics publishes consumer-based indices monthly, but does not report a CPI change on June 1; adjustments are reported in the middle of each month. The Board uses the CPI–U index, which is based on all urban consumers and represents approximately 87 percent of the U.S. population, as the index for adjusting the $400 dollar figure. The adjustment to the CPI–U index reported by the Bureau of Labor Statistics on May 13, 2011, was the CPI–U index in effect on June 1, and reflects the percentage change from April 2010 to April 2011. The adjustment to the $400 figure below reflects a 3.2 percent increase in the CPI–U index for this period and is PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 35723 rounded to whole dollars for ease of compliance. The fee trigger being adjusted in this Federal Register notice pursuant to TILA section 103(aa) is used in determining whether a loan is covered by section 226.32 of Regulation Z. Such loans have generally been known as ‘‘HOEPA loans.’’ In July 2008, the Board revised Regulation Z to adopt additional protections for ‘‘higher-priced’’ loans, using its authority under TILA section 129(l)(2). Those revisions define a class of dwelling-secured transactions, described in section 226.35 of Regulation Z, using a threshold based on average market rates that the Board publishes on a regular basis. The adjustment published today does not affect the triggers adopted in July 2008 for higher-priced loans. On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the ‘‘Reform Act’’) was enacted into law.1 Section 1431 of the Reform Act revises the statutory fee trigger for HOEPA loans. The amendments made by Section 1431 of the Reform Act will be implemented in a future rulemaking. Accordingly, the adjustment to the fee trigger that is being published today will become effective on January 1, 2012 and will apply for one year, or until final rules under Section 1431 of the Reform Act become effective, whichever is earlier. II. Adjustment and Commentary Revision Effective January 1, 2012, for purposes of determining whether a home mortgage transaction is covered by 12 CFR 226.32 (based on the total points and fees payable by the consumer at or before loan consummation), a loan is covered if the points and fees exceed the greater of $611 or 8 percent of the total loan amount. Comment 32(a)(1)(ii)–2, which lists the adjustments for each year, is amended to reflect the dollar adjustment for 2012. Because the timing and method of the adjustment are set by statute, the Board finds that notice and public comment on the change are unnecessary. 5 U.S.C. 553(b)(B). III. Regulatory Flexibility Analysis The Board certifies that this amendment to Regulation Z will not have a significant economic impact on a substantial number of small entities. The only change is to increase the threshold for transactions requiring HOEPA disclosures. This change is mandated by statute. 1 Public E:\FR\FM\20JNR1.SGM Law 111–203, 124 Stat. 1376. 20JNR1

Agencies

[Federal Register Volume 76, Number 118 (Monday, June 20, 2011)]
[Rules and Regulations]
[Pages 35722-35723]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-15178]


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FEDERAL RESERVE SYSTEM

12 CFR Part 226

[Regulation Z; Docket No. R-1424]


Truth in Lending

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule, staff commentary.

-----------------------------------------------------------------------

SUMMARY: The Board is publishing a final rule amending the staff 
commentary that interprets the requirements of Regulation Z, which 
implements the Truth in Lending Act (TILA). Effective July 21, 2011, 
the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-
Frank Act) amends TILA by increasing the threshold for exempt consumer 
credit transactions from $25,000 to $50,000. In addition, the Dodd-
Frank Act requires that this threshold be adjusted annually by any 
annual percentage increase in the Consumer Price Index for Urban Wage 
Earners and Clerical Workers (CPI-W). Accordingly, based on the annual 
percentage increase in the CPI-W as of June 1, 2011, the Board is 
adjusting the exemption threshold from $50,000 to $51,800, effective 
January 1, 2012.
    Because the Dodd-Frank Act also requires similar adjustments in the 
Consumer Leasing Act's threshold for exempt consumer leases, the Board 
is making similar amendments to Regulation M elsewhere in today's 
Federal Register.

DATES: This final rule is effective January 1, 2012.

FOR FURTHER INFORMATION CONTACT: Lorna M. Neill, Senior Attorney, 
Division of Consumer and Community Affairs, Board of Governors of the 
Federal Reserve System, at (202) 452-3667 or 452-2412; for users of 
Telecommunications Device for the Deaf (TDD) only, contact (202) 263-
4869.

SUPPLEMENTARY INFORMATION:

I. Background

    Effective July 21, 2011, the Dodd-Frank Wall Street Reform and 
Consumer Protection Act of 2010 (Dodd-Frank Act) increases the 
threshold in the Truth in Lending Act (TILA) for exempt consumer credit 
transactions from $25,000 to $50,000. Public Law 111-203 Sec.  1100E, 
124 Stat. 1376 (2010). In addition, the Dodd-Frank Act requires that 
this threshold be adjusted annually for inflation by the annual 
percentage increase in the Consumer Price Index for Urban Wage Earners 
and Clerical Workers (CPI-W), as published by the Bureau of Labor 
Statistics. In April 2011, the Board issued a final rule amending 
Regulation Z (which implements TILA) consistent with these provisions 
of the Dodd-Frank Act. 76 FR 18354 (Apr. 4, 2011).
    As amended, Sec.  226.3(b)(1)(ii) of Regulation Z provides that the 
exemption threshold will be adjusted annually effective January 1 of 
each year based on any annual percentage increase in the CPI-W that was 
in effect on the preceding June 1. Furthermore, any increase in the 
threshold amount will be rounded to the nearest $100 increment. For 
example, if the annual percentage increase in the CPI-W would result in 
a $950 increase in the threshold amount, the threshold amount will be 
increased by $1,000. However, if the annual percentage increase in the 
CPI-W would result in a $949 increase in the threshold amount, the 
threshold amount will be increased by $900. See comment 3(b)-1.

II. Adjustment and Commentary Revision

    Effective January 1, 2012, the adjusted exemption threshold amount 
is $51,800. This adjustment is based on the CPI-W index in effect on 
June 1, 2011, which was reported on May 13, 2011. The Bureau of Labor 
Statistics publishes consumer-based indices monthly, but does not 
report a CPI change on June 1; adjustments are reported in the middle 
of the month. The CPI-W is a subset of the CPI-U index (based on all 
urban consumers) and represents approximately 32 percent of the U.S. 
population. The adjustment reflects a 3.6 percent increase in the CPI-W 
from April 2010 to April 2011 and is rounded to the nearest $100 
increment. Accordingly, the Board is revising comment 3(b)-1 (as 
amended effective July 21, 2011) to add a new subparagraph 3(b)-1.iii 
stating that, from January 1, 2012 through December 31, 2012, the 
threshold amount is $51,800. This revision is effective January 1, 
2012.
    Under the Administrative Procedures Act, notice and opportunity for 
public comment are not required if the Board finds that notice and 
public comment are unnecessary. 5 U.S.C. 553(b)(B). This annual 
adjustment is required by statute. The amendment in this notice is 
technical and applies the method previously established in Regulation Z 
for determining any adjustments to the exemption threshold. For these 
reasons, the Board has determined that publishing a notice of proposed 
rulemaking and providing opportunity for public comment are 
unnecessary. Therefore, the amendment is adopted in final form.

III. Regulatory Flexibility Analysis

    The Board certifies that this amendment to Regulation Z will not 
have a significant economic impact on a substantial number of small 
entities. The only change is to adjust the exemption threshold to 
reflect any annual percentage increase in the CPI-W. This change is 
required by statute. In addition, the Board believes that this 
amendment will not have a significant impact on a substantial number of 
small entities for the reasons stated in its April 2011 final rule. See 
76 FR 18354, 18360-61.

List of Subjects in 12 CFR Part 226

    Advertising, Consumer protection, Federal Reserve System, Reporting 
and recordkeeping requirements, Truth in Lending.

Text of Final Revisions

    For the reasons set forth in the preamble, the Board amends 
Regulation Z, 12 CFR part 226, as set forth below:

PART 226--TRUTH IN LENDING (REGULATION Z)

0
1. The authority citation for part 226 continues to read as follows:

    Authority: 12 U.S.C. 3806; 15 U.S.C. 1604, 1637(c)(5), and 
1639(l); Pub. L. 111-24 Sec.  2, 123 Stat. 1734; Pub. L. 111-203, 
124 Stat. 1376.

Subpart B--Open-End Credit

0
2. In Supplement I to Part 226 as amended effective July 21, 2011 in 76 
FR 18354 (Apr. 4, 2011), under Section 226.3--Exempt Transactions, 
under 3(b)

[[Page 35723]]

Credit over applicable threshold amount, paragraph 1.iii is added 
effective January 1, 2012.
    The addition reads as follows:

Supplement I to Part 226--Official Staff Interpretations

* * * * *

Subpart A--General

* * * * *

Sec.  226.3--Exempt Transactions

* * * * *
    3(b) Credit over applicable threshold amount.
    1. Threshold amount. * * *
* * * * *
    iii. From January 1, 2012 through December 31, 2012, the 
threshold amount is $51,800.
* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, June 13, 2011.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 2011-15178 Filed 6-17-11; 8:45 am]
BILLING CODE 6210-01-P