Delayed Implementation of Certain New Mortgage Disclosures, 70105-70114 [2012-28341]
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70105
Rules and Regulations
Federal Register
Vol. 77, No. 226
Friday, November 23, 2012
10 CFR Parts 429 and 430
October 31, 2012 final rule. (77 FR
65941)
Pursuant to the Administrative
Procedure Act, 5 U.S.C. 553(b), DOE has
determined that notice and prior
opportunity for comment on this rule
are unnecessary and contrary to the
public interest. The instruction is being
revised to delete reference to adding
section 3.1.3.3 because there is no
accompanying text for such a section;
the insertion was made in error. DOE
has determined that there is good cause
to waive the 30-day delay in effective
date for these same reasons.
[Docket No. EERE–2010–BT–TP–0039]
Correction
RIN 1904–AC01
■
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The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.
DEPARTMENT OF ENERGY
In FR Doc. 2012–25645, appearing on
page 65941 in the Federal Register of
Wednesday, October 31, 2012, the
following correction is made:
Energy Conservation Program: Test
Procedures for Residential
Dishwashers, Dehumidifiers, and
Conventional Cooking Products;
Correction.
Office of Energy Efficiency and
Renewable Energy, Department of
Energy.
ACTION: Final rule; correction.
AGENCY:
The Department of Energy is
correcting a final rule that appeared in
the Federal Register of October 31,
2012. The rule established new test
procedures for residential dishwashers
and dehumidifiers, and amended the
currently applicable test procedure for
conventional cooking products under
the Energy Policy and Conservation Act.
DATES: The effective date of this rule is
December 17, 2012.
FOR FURTHER INFORMATION CONTACT:
Ms. Ashley Armstrong, U.S. Department
of Energy, Office of Energy Efficiency
and Renewable Energy, Building
Technologies Program, EE–2J, 1000
Independence Avenue SW.,
Washington, DC 20585–0121.
Telephone: (202) 586–6590. Email:
Ashley.Armstrong@ee.doe.gov.
Ms. Elizabeth Kohl, U.S. Department of
Energy, Office of the General Counsel,
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SW., Washington, DC 20585–0121.
Telephone: (202) 586–7796. Email:
Elizabeth.Kohl@hq.doe.gov.
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SUMMARY:
SUPPLEMENTARY INFORMATION:
Procedural Issues and Regulatory
Review
The regulatory reviews conducted for
this rulemaking are those set forth in the
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Appendix I to Subpart B of Part 430
[Corrected]
■ On page 65987, in the second column,
the language of amendatory instruction
11.d.4, ‘‘Adding sections 3.1.3, 3.1.3.1,
3.1.3.2, and 3.1.3.3;’’ is corrected to read
as follows: ‘‘Adding sections 3.1.3,
3.1.3.1, and 3.1.3.2;’’
Issued in Washington, DC, on November
16, 2012.
Kathleen B. Hogan,
Deputy Assistant Secretary for Energy
Efficiency, Energy Efficiency and Renewable
Energy.
Consumer Protection Act that would
otherwise take effect on January 21,
2013. Instead, to avoid potential
consumer confusion and reduce
compliance burden for industry, the
Bureau plans to implement these
disclosures as part of the integrated
mortgage disclosure forms proposed
earlier this year, which combine certain
disclosures that consumers receive in
connection with applying for and
closing on a mortgage loan under the
Truth in Lending Act and the Real
Estate Settlement Procedures Act.
Accordingly, this rulemaking exempts
persons from complying with these
mortgage disclosure requirements and
provides that such exemptions are
intended to last only until the integrated
mortgage disclosure forms take effect.
DATES: The rule is effective on
November 23, 2012.
FOR FURTHER INFORMATION CONTACT:
Michael G. Silver, Counsel; and Richard
B. Horn, Senior Counsel, Office of
Regulations, Consumer Financial
Protection Bureau, 1700 G Street NW.,
Washington, DC 20552 at (202) 435–
7700.
SUPPLEMENTARY INFORMATION:
I. Overview
Bureau of Consumer Financial
Protection.
ACTION: Final rule; official
interpretation.
A. Dodd-Frank Act
The Dodd-Frank Wall Street Reform
and Consumer Protection Act (DoddFrank Act), Public Law 111–203,
amended the Real Estate Settlement
Procedures Act of 1974 (RESPA) and the
Truth in Lending Act (TILA) to mandate
that the Bureau of Consumer Financial
Protection (Bureau) establish a single
disclosure scheme for use by lenders or
creditors in complying with certain
mortgage disclosure requirements under
both statutes.1 Sections 1098 and 1100A
of the Dodd-Frank Act amended RESPA
section 4(a) and TILA section 105(b),
respectively, to require that the Bureau
publish a single, integrated disclosure
for mortgage loan transactions
(including real estate settlement cost
statements) which includes the
disclosure requirements of TILA and
sections 4 and 5 of RESPA that, taken
The Bureau of Consumer
Financial Protection (Bureau) is
amending Regulation Z (Truth in
Lending) to, in effect, delay
implementation of certain new mortgage
disclosure requirements in title XIV of
the Dodd-Frank Wall Street Reform and
1 RESPA and TILA historically have been
implemented by regulations of the Department of
Housing and Urban Development (HUD) under
Regulation X and the Board of Governors of the
Federal Reserve System (the Board) under
Regulation Z, respectively. The Dodd-Frank Act
generally consolidated and transferred these
rulemaking authorities to the Bureau.
[FR Doc. 2012–28451 Filed 11–21–12; 8:45 am]
BILLING CODE 6450–01–P
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1026
[Docket No. CFPB–2012–0045]
RIN 3170–AA32
Delayed Implementation of Certain
New Mortgage Disclosures
AGENCY:
SUMMARY:
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Federal Register / Vol. 77, No. 226 / Friday, November 23, 2012 / Rules and Regulations
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together, may apply to a transaction that
is subject to both or either provisions of
law. 12 U.S.C. 2603(a); 15 U.S.C.
1604(b). Section 1032(f) of the DoddFrank Act mandated that the Bureau
propose for public comment rules and
model disclosures that integrate the
TILA and RESPA disclosures by July 21,
2012. 12 U.S.C. 5532(f). As noted below,
the Bureau satisfied this statutory
mandate and issued proposed rules and
forms on July 9, 2012.2
In addition to the integrated
disclosure requirements in title X of the
Dodd-Frank Act, various provisions of
title XIV of the Dodd-Frank Act amend
TILA, RESPA, and other consumer
financial laws to impose new disclosure
requirements for mortgage transactions
(the Title XIV Disclosures). These
provisions generally require disclosure
of certain information when a consumer
applies for a mortgage loan or shortly
before consummation of the loan,
around the same time that consumers
will receive the TILA–RESPA integrated
disclosures required by sections 1032(f),
1098, and 1100A of the Dodd-Frank Act
(the TILA–RESPA integrated
disclosures), and after consummation of
the loan if certain events occur. DoddFrank Act title XIV provisions generally
take effect within 18 months after the
designated transfer date (i.e., by January
21, 2013) unless final rules
implementing those requirements are
issued on or before that date and
provide for a different effective date
pursuant to Dodd-Frank Act section
1400(c)(3).3
The Title XIV Disclosures generally
include the following:
• Warning regarding negative
amortization features. Dodd-Frank Act
section 1414(a); TILA section
129C(f)(1).4
2 See the Bureau’s press release Consumer
Financial Protection Bureau proposes ‘‘Know Before
You Owe’’ mortgage forms (July 9, 2012), available
at https://www.consumerfinance.gov/pressreleases/
consumer-financial-protection-bureau-proposesknow-before-you-owe-mortgage-forms/; the Bureau’s
blog post Know Before You Owe: Introducing our
proposed mortgage disclosure forms (July 9, 2012),
available at https://www.consumerfinance.gov/blog/
know-before-you-owe-introducing-our-proposedmortgage-disclosure-forms/.
3 Dodd-Frank Act section 1400(c)(3) is codified at
15 U.S.C. 1601 note.
4 Dodd-Frank Act section 1414(a) also added to
TILA new section 129C(f)(2), which requires firsttime borrowers for certain residential mortgage
loans that could result in negative amortization to
provide the creditor with documentation to
demonstrate that the consumer received
homeownership counseling from organizations or
counselors certified as competent to provide such
counseling by HUD. That provision is implemented
in the Bureau’s proposal to implement Dodd-Frank
Act requirements expanding protections for ‘‘highcost’’ mortgage loans under the Home Ownership
and Equity Protection Act of 1994 (HOEPA),
pursuant to TILA sections 103(bb) and 129, as
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• Disclosure of State law antideficiency protections. Dodd-Frank Act
section 1414(c); TILA section 129C(g)(2)
and (3).
• Disclosure regarding creditor’s
partial payment policy prior to
consummation and, for new creditors,
after consummation. Dodd-Frank Act
section 1414(d); TILA section 129C(h).
• Disclosure regarding mandatory
escrow or impound accounts. DoddFrank Act section 1461(a); TILA section
129D(h).
• Disclosure prior to consummation
regarding waiver of escrow in
connection with the transaction. DoddFrank Act section 1462; TILA section
129D(j)(1)(A).
• Disclosure regarding cancellation of
escrow after consummation. DoddFrank Act section 1462; TILA section
129D(j)(1)(B).
• Disclosure of monthly payment,
including escrow, at initial and fullyindexed rate for variable-rate residential
mortgage loan transactions. Dodd-Frank
Act section 1419; TILA section
128(a)(16).
• Repayment analysis disclosure to
include amount of escrow payments for
taxes and insurance. Dodd-Frank Act
section 1465; TILA 128(b)(4).
• Disclosure of aggregate amount of
settlement charges, amount of charges
included in the loan and the amount of
such charges the borrower must pay at
closing, the approximate amount of the
wholesale rate of funds, and the
aggregate amount of other fees or
required payments in connection with a
residential mortgage loan. Dodd-Frank
Act section 1419; TILA section
128(a)(17).
• Disclosure of aggregate amount of
mortgage originator fees and the amount
of fees paid by the consumer and the
creditor. Dodd-Frank Act section 1419;
TILA section 128(a)(18).
• Disclosure of total interest as a
percentage of principal. Dodd-Frank Act
section 1419; TILA section 128(a)(19).
• Optional disclosure of appraisal
management company fees. Dodd-Frank
Act section 1475; RESPA section 4(c).
• Disclosure regarding notice of reset
of hybrid adjustable rate mortgage.
Dodd-Frank Act section 1418(a); TILA
section 128A(b).
• Loan originator identifier
requirement. Dodd-Frank section
1402(a)(2); TILA section 129B(b)(1)(B).
amended by Dodd-Frank Act sections 1431 through
1433 (the 2012 HOEPA Proposal). 77 FR 49090
(Aug. 15, 2012). The 2012 HOEPA Proposal also
implements the requirement of RESPA section 5(c),
added by section 1450 of the Dodd-Frank Act, that
lenders provide borrowers with a list of certified
homeownership counselors. The Bureau expects to
issue a final rule related to the 2012 HOEPA
Proposal on or before January 21, 2013.
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• Consumer notification regarding
appraisals for higher-risk mortgages.
Dodd-Frank Act section 1471; TILA
section 129H(d).
• Consumer notification regarding the
right to receive an appraisal copy. DoddFrank Act section 1474; Equal Credit
Opportunity Act (ECOA) section
701(e)(5).
As noted in the list above, the Title
XIV Disclosures include certain
disclosures that may need to be given
both before and after consummation.
For example, the Title XIV Disclosures
include disclosures regarding a
creditor’s policy for acceptance of
partial loan payments both before
consummation and, for persons who
subsequently become creditors for the
transaction, after consummation as
required by new TILA section 129C(h),
added by Dodd-Frank Act section
1414(d).5 In addition, the Title XIV
Disclosures include disclosures for
consumers who waive or cancel escrow
services both before and after
consummation, added by Dodd-Frank
Act section 1462. Specifically, new
TILA section 129D(j)(1)(A) requires a
creditor or servicer to provide a
disclosure with the information set forth
under TILA section 129D(j)(2) when an
impound, trust, or other type of account
for the payment of property taxes,
insurance premiums, or other purposes
relating to real property securing a
consumer credit transaction is not
established in connection with the
transaction (the Pre-Consummation
Escrow Waiver Disclosure). New TILA
section 129D(j)(1)(B) requires a creditor
or servicer to provide disclosures postconsummation with the information set
forth under TILA section 129D(j)(2)
when a consumer chooses, and provides
written notice of the choice, to close his
or her escrow account established in
connection with a consumer credit
transaction secured by real property in
accordance with any statute, regulation,
or contractual agreement (the PostConsummation Escrow Cancellation
Disclosure). 15 U.S.C. 1639d(j)(1)(A),
5 As it stated in the TILA–RESPA Integration
Proposal, the Bureau believes that to give effect to
the legislative purpose of section 1414(d) of the
Dodd-Frank Act, the disclosure requirements of
TILA section 129C(h) should apply without regard
to whether the person would be a ‘‘creditor’’ under
TILA and Regulation Z. See 77 FR 51116, 51265.
For these reasons, in the TILA–RESPA Integration
Proposal, the Bureau proposed to retain the term
‘‘covered person’’ under § 1026.39(a)(1) and its
definition, which would subject such covered
persons to the proposed disclosure requirements.
Id. As in the TILA–RESPA Integration Proposal, in
this final rule the Bureau is temporarily exempting
‘‘persons’’ (as defined in Regulation Z) rather than
‘‘creditors’’ from compliance with the provisions of
TILA section 129C(h), which includes covered
persons.
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1639d(j)(1)(B). The statute sets forth an
identical set of information for both of
these disclosures.6
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B. TILA–RESPA Integration Proposal
On July 9, 2012, the Bureau issued a
proposal requesting comment on
proposed rules and forms to integrate
certain disclosure requirements of TILA
and RESPA for most closed-end
consumer credit transactions secured by
real property (the TILA–RESPA
Integration Proposal), as required by
sections 1032(f), 1098, and 1100A of the
Dodd-Frank Act.7 The proposed rule
would amend the Bureau’s Regulation
X, 12 CFR part 1024, and Regulation Z,
12 CFR part 1026. The proposal was
published in the Federal Register on
August 23, 2012. 77 FR 51116 (Aug. 23,
2012).
Among other things, the TILA–RESPA
Integration Proposal requested comment
on an amendment to § 1026.1(c) of
Regulation Z that would temporarily
exempt persons from compliance with
the following Title XIV Disclosures
(collectively, the Affected Title XIV
Disclosures) so that the disclosures
could instead be incorporated into the
TILA–RESPA integrated disclosures that
would be finalized in the future:
• Warning regarding negative
amortization features. Dodd-Frank Act
section 1414(a); TILA section 129C(f)(1).
• Disclosure of State law antideficiency protections. Dodd-Frank Act
section 1414(c); TILA section 129C(g)(2)
and (3).
• Disclosure regarding creditor’s
partial payment policy prior to
consummation and, for new creditors,
6 The information set forth under TILA section
129D(j)(2) includes information concerning any
applicable fees or costs associated with either the
non-establishment of the escrow account at the time
of the transaction, or any subsequent closure of the
account; a clear and prominent statement that the
consumer is responsible for personally and directly
paying the non-escrowed items, in addition to
paying the mortgage loan payment, in the absence
of any such account, and the fact that the costs for
taxes, insurance, and related fees can be substantial;
a clear explanation of the consequences of any
failure to pay non-escrowed items, including the
possible requirement for the forced placement of
insurance by the creditor or servicers and the
potentially higher cost (including any potential
commission payments to the servicer) or reduced
coverage for the consumer in the event of any such
creditor-placed insurance; and other information
the Bureau determines is necessary for consumer
protection. 15 U.S.C. 1639d(j)(2).
7 See the Bureau’s press release Consumer
Financial Protection Bureau proposes ‘‘Know Before
You Owe’’ mortgage forms (July 9, 2012), available
at https://www.consumerfinance.gov/pressreleases/
consumer-financial-protection-bureau-proposesknow-before-you-owe-mortgage-forms/; the Bureau’s
blog post Know Before You Owe: Introducing our
proposed mortgage disclosure forms (July 9, 2012),
available at https://www.consumerfinance.gov/blog/
know-before-you-owe-introducing-our-proposedmortgage-disclosure-forms/.
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after consummation. Dodd-Frank Act
section 1414(d); TILA section 129C(h).
• Disclosure regarding mandatory
escrow or impound accounts. DoddFrank Act section 1461(a); TILA section
129D(h).
• Disclosure prior to consummation
regarding waiver of escrow in
connection with the transaction. DoddFrank Act section 1462; TILA section
129D(j)(1)(A).
• Disclosure of monthly payment,
including escrow, at initial and fullyindexed rate for variable-rate residential
mortgage loan transactions. Dodd-Frank
Act section 1419; TILA section
128(a)(16).
• Repayment analysis disclosure to
include amount of escrow payments for
taxes and insurance. Dodd-Frank Act
section 1465; TILA 128(b)(4).
• Disclosure of aggregate amount of
settlement charges, amount of charges
included in the loan and the amount of
such charges the borrower must pay at
closing, the approximate amount of the
wholesale rate of funds, and the
aggregate amount of other fees or
required payments in connection with a
residential mortgage loan. Dodd-Frank
Act section 1419; TILA section
128(a)(17).
• Disclosure of aggregate amount of
mortgage originator fees and the amount
of fees paid by the consumer and the
creditor. Dodd-Frank Act section 1419;
TILA section 128(a)(18).
• Disclosure of total interest as a
percentage of principal. Dodd-Frank Act
section 1419; TILA section 128(a)(19).
• Optional disclosure of appraisal
management company fees. Dodd-Frank
Act section 1475; RESPA section 4(c).
The TILA–RESPA Integration
Proposal provided for a bifurcated
comment process. Comments regarding
the proposed amendments to § 1026.1(c)
were required to have been received on
or before September 7, 2012. For all
other proposed amendments and
comments pursuant to the Paperwork
Reduction Act, comments were required
to have been received on or before
November 6, 2012.8
8 In its initial Federal Register notice, the Bureau
also applied the September 7, 2012 deadline to
comments on the proposed amendments to the
definition of finance charge in § 1026.4. On August
31, 2012, however, the Bureau issued a notice
extending the deadline for such comments to
November 6, 2012. See the Bureau’s blog post, More
time for comments on proposed changes to the
definition of the finance charge (August 31, 2012),
available at https://www.consumerfinance.gov/blog/
more-time-for-comments-on-proposed-changes-tothe-definition-of-the-finance-charge/. The extension
was published in the Federal Register on
September 6, 2012. See 77 FR 54843 (Sept. 6, 2012).
It did not change the comment period for any other
aspects of the TILA–RESPA Integration Proposal,
which, as noted above, ended November 6, 2012.
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70107
C. 2011 Escrows Proposal
Sections 1461 and 1462 of the DoddFrank Act create new TILA section
129D, which substantially codifies
requirements that the Board had
previously adopted in Regulation Z
regarding escrow requirements for
higher-priced mortgage loans, but also
adds disclosure requirements and
lengthens the period for which escrow
accounts are required. 15 U.S.C. 1639d.
On March 2, 2011, the Board proposed
amendments to Regulation Z
implementing certain requirements of
sections 1461 and 1462 of the DoddFrank Act. 76 FR 11598 (Mar. 2, 2011)
(2011 Escrows Proposal). The Board
proposed, among other things, to
implement the disclosure requirements
under TILA section 129D(j)(1) in
Regulation Z under a new
§ 226.19(f)(2)(ii) and § 226.20(d) of the
Board’s Regulation Z, including both the
Pre-Consummation Escrow Waiver
Disclosure and the Post-Consummation
Escrow Cancellation Disclosure.
The comment period for the 2011
Escrows Proposal closed on May 2,
2011. The Board did not finalize the
2011 Escrows Proposal. Subsequent to
the issuance of the 2011 Escrows
Proposal, the authority for finalizing the
proposal was transferred to the Bureau
pursuant to the Dodd-Frank Act.9
II. Summary of Proposed Rule and
Comments
A. Affected Title XIV Disclosures
As described above, the Affected Title
XIV Disclosures impose certain new
disclosure requirements for mortgage
transactions. Section 1400(c)(3) of the
Dodd-Frank Act 10 provides that, if
regulations implementing the Affected
Title XIV Disclosures are not issued on
the date that is 18 months after the
designated transfer date (i.e., by January
21, 2013), the statutory requirements
will take effect on that date.
The Bureau provided in the TILA–
RESPA Integration Proposal that it
believed that implementing integrated
disclosures that satisfy the applicable
sections of TILA and RESPA and the
Affected Title XIV Disclosures would
benefit consumers and facilitate
compliance for industry with TILA and
RESPA. The Bureau provided further
that consumers would benefit from a
consolidated disclosure that conveys
loan terms and costs to consumers in a
9 Effective July 21, 2011, the Dodd-Frank Act
generally transferred rulemaking authority for TILA
to the Bureau (except for certain rulemaking
authority over motor vehicle dealers that remains
with the Board). See sections 1061 and 1100A of the
Dodd-Frank Act.
10 Codified at 15 U.S.C. 1601 note.
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coordinated way, and industry would
benefit by integrating two sets of
overlapping disclosures into a single
form and by avoiding regulatory burden
associated with revising systems and
practices multiple times. 77 FR 51116,
51133.
However, given the broad scope and
complexity of TILA–RESPA Integration
Proposal and the 120-day comment
period provided, the Bureau stated that
it believed a final rule would not be
issued by January 21, 2013. The Bureau
was concerned that absent a final rule
implementing the Affected Title XIV
Disclosures, institutions would have to
comply with those disclosures
beginning January 21, 2013 due to the
statutory requirement that any section of
Dodd-Frank Act title XIV for which
regulations have not been issued by
January 21, 2013 are self-effectuating as
of that date. The Bureau stated that this
likely would result in widely varying
approaches to compliance in the
absence of regulatory guidance, creating
confusion for consumers, and would
impose a significant burden on industry.
For example, this could result in a
consumer who shops for a mortgage
loan receiving different disclosures from
different creditors. The Bureau noted
that it believed such disclosures would
not only be unhelpful to consumers, but
likely would be confusing since the
same disclosures would be provided in
widely different ways, and, moreover,
implementing the Affected Title XIV
Disclosures separately from the TILA–
RESPA integrated disclosures would
increase compliance costs and burdens
on industry. The Bureau also noted in
the TILA–RESPA Integration Proposal
that nothing in the Dodd-Frank Act
itself or its legislative history suggests
that Congress contemplated how the
separate requirements in titles X and
XIV would work together.11
Accordingly, in the TILA–RESPA
Integration Proposal, the Bureau
proposed to implement the Affected
Title XIV Disclosures for purposes of
11 As the Bureau stated in the TILA–RESPA
Integration Proposal, certain of the Affected Title
XIV Disclosures indicate that Congress did not
intend for those disclosure requirements and the
TILA–RESPA integrated disclosures to operate
independently. For example, Dodd-Frank Act
section 1419 amended paragraphs (a)(16) through
(19) of TILA section 128 to require additional
content on the disclosure provided to consumers
within three days of application and in final form
at or before consummation. 15 U.S.C. 1638(a)(16)
through (19). Pursuant to TILA section 128(b)(1), for
residential mortgage transactions, all disclosures
required by TILA section 128(a) must be
‘‘conspicuously segregated’’ from all other
information provided in connection with the
transaction. 15 U.S.C. 1638(b)(1). Therefore, the
Bureau stated that these sections are directly
implicated by the integrated TILA–RESPA
requirement. 77 FR 51116, 51133.
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Dodd-Frank Act section 1400(c) by
providing a temporary exemption from
the requirement to comply with such
requirements such that they would not
become self-effective on January 21,
2013, and instead would be required at
the time the TILA–RESPA integrated
disclosure requirements become
effective.12 The Bureau proposed such
temporary exemption pursuant to its
authority under TILA sections 105(a)
and 105(f), RESPA section 19(a), DoddFrank Act section 1032(a) and, for
residential mortgage loans, Dodd-Frank
Act section 1405(b). The Bureau
explained that fully implementing the
Affected Title XIV Disclosures as part of
the broader integrated TILA–RESPA
rulemaking, rather than issuing rules
implementing each requirement
individually or allowing those statutory
provisions to take effect by operation of
law, will improve the overall
effectiveness of the integrated
disclosures for consumers and reduce
burden on industry.
Specifically, as set forth in the
section-by-section analysis to proposed
§ 1026.1(c) in the TILA–RESPA
Integration Proposal, the Bureau
proposed to delay those requirements by
temporarily exempting persons from the
requirement to comply on January 21,
2013.13 The Bureau stated in the TILA–
RESPA Integration Proposal that it
would remove this regulatory
exemption in the final rule
implementing the TILA–RESPA
integrated disclosures. The proposed
exemption would be, in effect, a delay
of the effective date of the Affected Title
XIV Disclosures.
B. Other Title XIV Disclosures
The Bureau proposed to exclude the
following Title XIV Disclosures from the
list of Affected Title XIV Disclosures in
the TILA–RESPA Integration Proposal,
stating they would be implemented in
separate rulemakings:
• Disclosure regarding notice of reset
of hybrid adjustable rate mortgage.
Dodd-Frank Act section 1418(a); TILA
section 128A(b).
• Loan originator identifier
requirement. Dodd-Frank section
1402(a)(2); TILA section 129B(b)(1)(B).
• Consumer notification regarding
appraisals for higher-risk mortgages.
Dodd-Frank Act section 1471; TILA
section 129H(d).
• Consumer notification regarding the
right to receive an appraisal copy. DoddFrank Act section 1474; ECOA section
701(e)(5).
• Post-Consummation Escrow
Cancellation Disclosure. Dodd-Frank
Act section 1462; TILA section
129D(j)(1)(B).
The Bureau stated generally that these
disclosures were expected to be
proposed separately in summer 2012
and finalized by January 21, 2013.
However, the Post-Consummation
Escrow Cancellation Disclosure was
excluded from the list of Affected Title
XIV Disclosures, in part, because the
Bureau stated it ‘‘will be implemented
by final rule pursuant to an outstanding
proposal published by the Board,’’
referring to the Board’s 2011 Escrows
Proposal.14
The Bureau proposed to delay the
Affected Title XIV Disclosures to the
fullest extent those requirements could
apply under the statutory provisions,
including to transactions not covered by
the proposed integrated disclosure
provisions, including open-end credit
plans, transactions secured by dwellings
that are not real property, and reverse
mortgages. The Bureau specifically
solicited comment on this scope of the
exemption of the Affected Title XIV
Disclosures. The Bureau also solicited
comment on whether the regulatory
exemption should sunset on a specific
date, rather than provide an exemption
until a final rule for the integrated
disclosures becomes effective.
C. Comments on the Proposed
Amendments to Section 1026.1(c)
As of September 7, 2012, the Bureau
had received nearly 500 comments on
the TILA–RESPA Integration Proposal
from depository institutions, credit
unions, settlement agents, mortgage
brokers, mortgage brokerage companies,
industry trade groups, consumers,
consumer advocacy organizations, a
State attorney general, GovernmentSponsored Enterprises (GSEs), and other
sources. More than 20 of these
comments specifically addressed the
Bureau’s proposed delay of the Affected
Title XIV Disclosures, and those
commenters were unanimously
supportive of a temporary exemption
from the Affected Title XIV Disclosures
until the TILA–RESPA integrated
disclosure rulemaking is finalized.
Several industry commenters and their
trade groups stated that this approach
would result in disclosures that are
more useful for consumers and would
facilitate compliance for financial
institutions by delaying compliance
until a comprehensive implementation
of all such rules could be accomplished.
A State attorney general commented in
support of this delayed implementation
12 Id.
13 77
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of the Affected Title XIV Disclosures,
stating that it would allow business
entities the time to make extensive
changes to their software and retrain
staff in order to comply with the new
integrated disclosure requirements.
A number of commenters urged the
Bureau to delay implementation of other
Title XIV Disclosures or otherwise
addressed the Title XIV Disclosures
more generally. One mortgage company
expressly urged the Bureau to delay
implementation of the other Title XIV
Disclosures (which include the PostConsummation Escrow Cancellation
Disclosure) in addition to the Affected
Title XIV Disclosures. A national trade
association for credit unions encouraged
the Bureau to use its exemption
authority under the Dodd-Frank Act,
TILA, and RESPA to the fullest extent
permissible to relieve regulatory
burdens for credit unions. Several statelevel trade associations for credit unions
urged the Bureau to finalize all
Regulation Z rulemakings at the same
time. A GSE noted the benefits of
implementing rules in a manner that
would necessitate only a one-time
change for software and other systems.
One trade association supported the
proposal to delay implementation of the
Affected Title XIV Disclosures and
urged the Bureau to clarify in the final
rule its reasoning for exercising its
exemption authority under section
1032(a) of the Dodd-Frank Act to
specifically incorporate the
considerations in section 1032(c) of the
Dodd-Frank Act. Two trade associations
commented that the Bureau should
make clear that proposed § 1026.1(c) is
a rule in ‘‘final form’’ pursuant to
section 1400(c)(1) of the Dodd-Frank
Act and that such a rule prevents the
triggering of section 1400(c)(3) of the
Dodd-Frank Act.
Several industry trade associations
were opposed to a sunset of the
regulatory exemption on a specific date
and instead, were in favor of the
exemption existing until the TILA–
RESPA integrated disclosures final rule
becomes effective. These industry trade
group commenters were concerned that
a specific sunset date may precede the
effective date for the TILA–RESPA
integration final rule. Removing the
exemption at the same time as
implementing the TILA–RESPA
integrated disclosures would, in their
view, reduce unnecessary disruption
and provide regulatory certainty.
In addition, the Bureau did not
receive any comments in favor of
limiting the scope of the temporary
exemptions, such that the disclosure
requirements would become selfeffective for the types of loans that are
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not subject to the TILA–RESPA
integrated disclosure requirements in
the TILA–RESPA Integration Proposal.
One national trade association
representing the reverse mortgage
industry commented in support of
exemptions from the Affected Title XIV
Disclosures for reverse mortgage loans.
A national trade association
representing banks and bank holding
companies that provide retail financial
services commented that the exemption
should also apply to the fullest extent
under the statute, and not be limited to
the loans subject the TILA–RESPA
integrated disclosure requirements as
proposed. The trade association
specifically stated that many banks use
similar systems for home equity lines of
credit, reverse mortgages, and loans
secured by dwellings that are not real
property and noted that including them
in the exemption would allow banks to
implement the disclosure requirements
in a coordinated manner. A trade
association representing financial
institutions in a particular State also
commented in favor of the full scope of
the temporary exemption.
D. Board’s 2011 Escrows Proposal for
the Post-Consummation Escrow
Cancellation Disclosure
The 2011 Escrows Proposal proposed
to implement the Pre-Consummation
Escrow Waiver Disclosure required
under TILA section 129D(j)(1)(A) and
the Post-Consummation Escrow
Cancellation Disclosure required under
TILA section 129D(j)(1)(B).15 The
content requirements set forth in TILA
section 129D(j)(2) are the same for the
Pre-Consummation Escrow Waiver
Disclosure and the Post-Consummation
Escrow Cancellation Disclosure. The
2011 Escrows Proposal proposed model
forms for both disclosures. Under the
2011 Escrows Proposal, the disclosures
would be required to be delivered at
least three business days before
consummation or cancellation of the
existing escrow account after
consummation, as applicable. The
proposed disclosures would explain
what an escrow account is; how it
works; and the risk of not having an
escrow account. It also would state the
potential consequences of failing to pay
home-related costs such as taxes and
insurance in the absence of an escrow
account. In addition, it would state why
there will be no escrow account or why
it is being cancelled, as applicable; the
amount of any fee imposed for not
having an escrow account; and how the
consumer can request that an escrow
account be established or left in place,
15 76
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along with any deadline for such
requests.16
The Board received approximately 70
comments to the 2011 Escrows
Proposal, of which roughly a dozen
addressed the timing of the
implementation of the PostConsummation Escrow Cancellation
Disclosure. Specifically, national
industry trade associations, State
industry trade associations, large
depository institutions, and community
banks urged the Board to delay
implementation of the Dodd-Frank Act
escrow disclosure requirements until
the Bureau had authority over the
disclosures or until the Bureau could
finalize the escrow disclosure
requirements along with the TILA–
RESPA integrated disclosures. These
commenters stated that harmonizing the
rulemakings would allow for a
comprehensive approach and avoid
duplicative forms and repetitive
rulemakings. One industry trade
association commented that it would be
‘‘premature’’ and ‘‘potentially
counterproductive’’ to issue new escrow
rules prior to the completion of the
TILA–RESPA integrated disclosures,
and therefore recommended that the
Board delay finalizing the escrow rules
to allow the Bureau to incorporate the
Dodd-Frank Act’s escrow amendments
into the TILA–RESPA integrated
disclosures.
As noted above, the Bureau proposed,
as part of the TILA–RESPA Integration
Proposal, to provide a temporary
exemption from compliance with the
TILA section 129D(j)(1)(A), which
requires the Pre-Consummation Escrow
Waiver Disclosure. The Bureau did not
propose to effectively delay the PostConsummation Escrow Cancellation
Disclosure in the TILA–RESPA
Integration Proposal, and instead stated
it would implement the statute, TILA
section 129D(j)(1)(B), by final rule
pursuant to the Board’s 2011 Escrows
Proposal. Absent the Bureau’s issuance
of a final rule implementing TILA
section 129D(j)(1)(B) by January 21,
2013, the provision would go into effect
as of such date by operation of law
under the Dodd-Frank Act section
1400(c)(3).17
16 76
FR 11598, 11599.
described under part IV below, the Bureau
considers an exemption from the disclosure
requirement under TILA section 129D(j)(1)(B), such
as that proposed in the TILA–RESPA Integration
Proposal for the Affected Title XIV Disclosures, to
be the issuance of a regulation implementing that
provision for purposes of Dodd-Frank Act section
1400(c)(3).
17 As
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III. Summary of the Final Rule
The final rule implements the
Affected Title XIV Disclosures and the
Post-Consummation Escrow
Cancellation Disclosure in § 1026.1(c) of
Regulation Z and provides for a
temporary exemption for persons from
these statutory disclosure requirements.
The Bureau is issuing this final rule
implementing the Affected Title XIV
Disclosures and the Post-Consummation
Escrow Cancellation Disclosure prior to
the statutory provisions becoming selfeffectuating on January 21, 2013.
Accordingly, persons will not be
required to comply with these statutory
disclosure requirements until such time
as the Bureau removes the exemption,
which it plans to do in the final rule for
the TILA–RESPA integrated disclosures,
and such removal takes effect.
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IV. Legal Authority
The Bureau is exercising its authority
under and consistent with TILA section
105(a) and (f), RESPA section 19(a),
Dodd-Frank section 1032(a), and, for
residential mortgage loans, Dodd-Frank
Act section 1405(b) to, in effect, delay
the effective date of the Affected Title
XIV Disclosures and the PostConsummation Escrow Cancellation
Disclosure by exempting regulated
persons from these provisions until a
final rule for the TILA–RESPA
integrated disclosures mandated by
Dodd-Frank Act sections 1032(f), 1098
and 1100A takes effect. 15 U.S.C.
1604(a), 1604(f); 12 U.S.C. 2617(a); 12
U.S.C. 5532(a); 15 U.S.C. 1601 note.
TILA section 105(a) gives the Bureau
authority to adjust or except from the
disclosure requirements of TILA all or
any class of transactions to effectuate
the purposes of TILA, to prevent
circumvention or evasion thereof, or
facilitate compliance therewith. As set
forth above and below, delaying the
Affected Title XIV Disclosures and the
Post-Consummation Escrow
Cancellation Disclosure until such time
as a final rule implementing the TILA–
RESPA integrated disclosures takes
effect achieves the purpose of TILA to
promote the informed use of credit
through a more effective, consolidated
disclosure, and facilitates compliance
by reducing regulatory burden
associated with revising systems and
practices multiple times and providing
multiple disclosures to consumers.
The Bureau is also exercising
exemption authority pursuant to TILA
section 105(f). The Bureau has
considered the factors in TILA section
105(f) and believes that an exemption is
appropriate under that provision.
Specifically, the Bureau believes that
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the exemption is appropriate for all
affected borrowers, regardless of their
other financial arrangements and
financial sophistication and the
importance of the loan to them.
Similarly, the Bureau believes that the
exemption is appropriate for all affected
loans, regardless of the amount of the
loan and whether the loan is secured by
the principal residence of the consumer.
Furthermore, the Bureau believes that,
on balance, the exemption will simplify
the credit process without undermining
the goal of consumer protection or
denying important benefits to
consumers.
As discussed above, the Bureau
believes that the exemption overall
provides a benefit to consumers by
facilitating a more effective,
consolidated disclosure scheme. Absent
an exemption, the Affected Title XIV
Disclosures and the Post-Consummation
Escrow Cancellation Disclosure would
complicate and hinder the mortgage
lending process because consumers
would receive inconsistent disclosures
and, likely, numerous additional pages
of Federal disclosures that do not work
together in a meaningful, synchronized
way. The Bureau also believes that the
credit process could be more expensive
and complicated if the Affected Title
XIV Disclosures and the PostConsummation Escrow Cancellation
Disclosure take effect independent of
the larger TILA–RESPA integration
rulemaking because industry would be
required to revise systems and practices
multiple times. The Bureau has also
considered the status of mortgage
borrowers in issuing the exemptions,
and believes the exemption is
appropriate to improve the informed use
of credit. The Bureau does not believe
that the goal of consumer protection
would be undermined by the
exemption, because of the risk that
layering the Affected Title XIV
Disclosures and the Post-Consummation
Escrow Cancellation Disclosure on top
of existing mandated disclosures would
lead to consumer confusion. The
exemption allows the Bureau to
coordinate the changes in a way that
improves overall consumer
understanding of the disclosures.
RESPA section 19(a) provides the
Bureau with authority to grant
reasonable exemptions for classes of
transactions from the requirements of
RESPA as necessary to achieve the
purposes of RESPA. 12 U.S.C. 2617(a).
As discussed above, one purpose of
RESPA is to achieve more effective
advance disclosure to home buyers and
sellers of settlement costs. RESPA
section 2(b)(1); 12 U.S.C. 2601(b).
Delaying the optional disclosure of the
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appraisal management company fee and
the fee paid to the appraiser provided
for by Dodd-Frank Act section 1475
(amending RESPA section 4(c)) until
such time as a final rule implementing
the TILA–RESPA integrated disclosures
takes effect will result in a more
effective disclosure and improve
consumer understanding, as discussed
above.
Section 1405(b) of the Dodd-Frank
Act additionally gives the Bureau
authority to exempt from or modify
disclosure requirements, in whole or in
part, for any class of residential
mortgage loans if the Bureau determines
that the exemption or modification is in
the interest of consumers and the
public. 15 U.S.C. 1601 note. As
discussed above, implementing the
Affected Title XIV Disclosures and the
Post-Consummation Escrow
Cancellation Disclosure with the TILA–
RESPA integrated disclosures is in the
interest of consumers because it allows
the Bureau to coordinate the changes
mandated by the Dodd-Frank Act in a
way that synchronizes and harmonizes
the disclosures, which in turn will
improve overall consumer
understanding of the disclosures.
Further, implementing the Affected
Title XIV Disclosures and the PostConsummation Escrow Cancellation
Disclosure as part of the integrated
disclosure rulemaking is in the public
interest because it produces a more
efficient regulatory scheme by
incorporating multiple, potentially
confusing disclosures into clear and
understandable forms through consumer
testing.
Consistent with section 1032(a) of the
Dodd-Frank Act,18 implementing the
Affected Title XIV Disclosures and the
Post-Consummation Escrow
Cancellation Disclosure together with
18 As the Bureau stated in the TILA–RESPA
Integration Proposal, Dodd-Frank Act section
1032(c) provides that, in prescribing rules pursuant
to section 1032, the Bureau ‘‘shall consider
available evidence about consumer awareness,
understanding of, and responses to disclosures or
communications about the risks, costs, and benefits
of consumer financial products or services.’’ 12
U.S.C. 5532(c). Consistent with Dodd-Frank Act
section 1032(a), in developing this final rule to
delay implementation of the Affected Title XIV
Disclosures and the Post-Consummation Escrow
Cancellation Disclosure, the Bureau considered
available studies, reports, and other evidence about
consumer awareness, understanding of, and
responses to disclosures or communications about
the risks, costs, and benefits of consumer financial
products or services, including the evidence
developed through its consumer testing of the
TILA–RESPA integrated disclosures as well as prior
testing done by the Board and HUD regarding TILA
and RESPA disclosures. See parts II and III of the
TILA–RESPA Integration Proposal. For the reasons
discussed in this final rule, the Bureau has
considered available evidence pursuant to DoddFrank Act section 1032(c).
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the TILA–RESPA integrated disclosures
would ensure that the features of
consumer credit transactions secured by
real property are fully, accurately, and
effectively disclosed to consumers in a
manner that permits consumers to
understand the costs, benefits, and risks
associated with the product or service,
in light of the facts and circumstances.
12 U.S.C. 5532(a). The Bureau believes
that implementing a single,
consolidated disclosure will benefit
consumers and facilitate compliance
with TILA and RESPA.
For these reasons, the Bureau is
issuing this final rule to delay the
Affected Title XIV Disclosures and the
Post-Consummation Escrow
Cancellation Disclosure until the Bureau
issues a final rule implementing the
TILA–RESPA integrated disclosures
required by sections 1032(f), 1098, and
1100A of the Dodd-Frank Act and such
rule takes effect. The Bureau considers
the adoption of these amendments to
§ 1026.1(c) as prescribing the rules in
final form for the Affected Title XIV
Disclosures and the Post-Consummation
Escrow Cancellation Disclosure
pursuant to Dodd-Frank Act section
1400(c)(1)(A), to the extent regulations
are required to be prescribed, and the
effective date of the final rule as
satisfying Dodd-Frank Act section
1400(c)(1)(B). The Bureau views this
final rule as issuing regulations for
purposes of Dodd-Frank Act section
1400(c)(3); therefore, the Affected Title
XIV Disclosures and PostConsummation Escrow Cancellation
Disclosure do not take effect by
operation of law with respect to any
transaction covered by TILA or RESPA
on January 21, 2013.
This final rule will be effective on the
date of publication in the Federal
Register. Under section 553(d) of the
Administrative Procedure Act (APA),
the required publication or service of a
substantive rule shall be made not less
than 30 days before its effective date,
except for (1) a substantive rule which
grants or recognizes an exemption or
relieves a restriction; (2) interpretative
rules and statements of policy; or (3) as
otherwise provided by the agency for
good cause found and published with
the rule. 5 U.S.C. 553(d). As discussed
in part III above and part V below, this
final rule provides for a temporary
exemption from the Affected Title XIV
Disclosures and the Post-Consummation
Escrow Cancellation Disclosure such
that they would not become selfeffective on January 21, 2013, and
instead would be required at the time
the TILA–RESPA integrated disclosures
become effective. Therefore, under
section 553(d)(1) of the APA, the Bureau
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is publishing this final rule less than 30
days before its effective date because it
is a substantive rule which grants or
recognizes an exemption or relieves a
restriction. 5 U.S.C. 553(d)(1).
V. Section-by-Section Analysis of Final
Rule
In the TILA–RESPA Integration
Proposal, the Bureau proposed to
exempt persons temporarily from the
disclosure requirements of the Affected
Title XIV Disclosures (i.e., sections
128(a)(16) through (19), 128(b)(4),
129C(f)(1), 129C(g)(2) and (3), 129C(h),
129D(h), and 129D(j)(1)(A) of TILA and
section 4(c) of RESPA), until regulations
implementing the integrated disclosures
required by sections 1032(f), 1098, and
1100A of the Dodd-Frank Act take
effect. 15 U.S.C. 1638(a)(16)–(19),
1638(b)(4), 1639c(f)(1), 1639c(g),
1639c(h), 1639d(h), and 1639d(j)(1)(A);
12 U.S.C. 2604(c); 12 U.S.C. 5532(f); 12
U.S.C. 2603; 15 U.S.C. 1604. The TILA–
RESPA Integration Proposal provided
for implementation of the exemption in
proposed § 1026.1(c)(5) by stating that
no person is required to provide the
disclosures required by the statutory
provisions listed above. Proposed
comment 1(c)(5)–1 explained that
§ 1026.1(c)(5) implements the abovelisted provisions of TILA and RESPA
added by the Dodd-Frank Act by
exempting persons from the disclosure
requirements of those sections. The
comment proposed to clarify that the
exemptions provided in proposed
§ 1026.1(c)(5) are intended to be
temporary and will apply only until
compliance with the regulations
implementing the integrated disclosures
required by section 1032(f) of the DoddFrank Act become mandatory. Proposed
comment 1(c)(5)–1 also clarified that the
exemption in proposed § 1026.1(c)(5)
does not exempt any person from any
other requirement of Regulation Z,
Regulation X, or of TILA or RESPA.
The Bureau has considered the
comments addressing the proposed
amendments to § 1026.1(c), which are
summarized in part II.C, above. Based
on those comments and its own
analysis, the Bureau has determined
that it will adopt the proposed
amendments to § 1026.1(c), with only
one substantive change and the
technical changes described below.
1. Post-Consummation Escrow
Cancellation Disclosure
Although the Post-Consummation
Escrow Cancellation Disclosure was not
included in the Affected Title XIV
Disclosures in the TILA–RESPA
Integration Proposal, the Bureau
nevertheless received comment
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requesting that it delay implementation
of this disclosure, as described above.
Furthermore, as discussed above, the
Board received similar requests from
commenters on its 2011 Escrows
Proposal, which is now the Bureau’s
responsibility.
The Bureau has considered the
comments received by the Board and
the Bureau and believes that, for the
reasons given by the commenters and
the reasons described in part II above,
delaying implementation of the PostConsummation Escrow Cancellation
Disclosure and coordinating such
implementation with that of the TILA–
RESPA integrated disclosures is in the
interest of industry and consumers
alike. As discussed in part II above, the
Dodd-Frank Act statutory requirements
for the content of the PreConsummation Escrow Waiver
Disclosure and the Post-Consummation
Escrow Cancellation Disclosure are the
same, and the model forms proposed in
the Board’s 2011 Escrows Proposal
contained similar language for both
disclosures. The Bureau tested language
for the Pre-Consummation Escrow
Waiver Disclosure at its consumer
testing conducted in connection with
the TILA–RESPA Integration Proposal
and proposed to integrate this
disclosure into the Closing Disclosure
(which integrates the final TILA
disclosure and the RESPA settlement
statement).19 Implementing the PostConsummation Escrow Cancellation
Disclosure along with the TILA–RESPA
integrated disclosures will allow the
Bureau to use feedback it has received
from consumer testing conducted prior
to the TILA–RESPA Integration
Proposal, the comments on that
proposal, and any consumer testing
conducted subsequent to the proposal to
harmonize the content and format of the
Post-Consummation Escrow
Cancellation Disclosure, the PreConsummation Escrow Waiver
Disclosure, and the TILA–RESPA
integrated disclosures. Consumers,
therefore, would benefit from a more
fully integrated and synchronized
overall mortgage disclosure scheme, and
industry would benefit from a more
coordinated implementation of the
overall mortgage disclosure scheme
mandated by the Dodd-Frank Act and
implemented by the Bureau. The Bureau
also notes that no commenters
supported the finalization of the PostConsummation Escrow Cancellation
19 For a report on the Bureau’s consumer testing,
see Kleimann Communication Group, Inc., Know
Before You Owe: Evolution of the Integrated TILA–
RESPA Disclosures (July 2012), available at https://
files.consumerfinance.gov/f/
201207_cfpb_report_tila-respa-testing.pdf.
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Disclosure with the planned finalization
of the Board’s 2011 Escrows Proposal on
or before January 21, 2013, and no
commenters supported allowing the
Post-Consummation Escrow
Cancellation Disclosure to take effect by
operation of law on that date.
In light of the considerations
discussed above, including the
comments submitted to the Board and
the Bureau in support of a temporary
exemption from compliance, the Bureau
is modifying the proposed amendments
to § 1026.1(c) to exempt persons from
compliance with the PostConsummation Escrow Cancellation
Disclosure in addition to the Affected
Title XIV Disclosures. Accordingly, the
Bureau is adding a reference in
§ 1026.1(c)(5) and associated
commentary to TILA section
129D(j)(1)(B).
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2. Technical Changes
In addition, in the final rule the
Bureau is making three technical
changes to § 1026.1 and its commentary.
First, in § 1026.1(a), reference has been
added to reflect the implementation of
certain provisions of RESPA. This
technical change relates to the fact that
the optional disclosure of appraisal
management company fees and fees
paid to appraisers under RESPA section
4(c) (as added by Dodd-Frank Act
section 1475) is being implemented in
Regulation Z, rather than Regulation X,
by exempting persons from the
disclosure requirements of that section.
Second, in comment 1(c)(5)–1,
references have been added to DoddFrank Act sections 1098 and 1100A,
which amend RESPA section 4(a) and
TILA section 105(b), respectively, in
addition to the proposed comment’s
reference to Dodd-Frank Act section
1032(f). This technical change reflects
the fact that sections 1098 and 1100A of
the Dodd-Frank Act also mandate the
TILA–RESPA integrated disclosures.
Third, the Bureau has amended
§ 1026.1(a) to make clear that the Office
of Management and Budget control
number listed applies only to Bureau
respondents.
VI. Section 1022(b)(2) Analysis
Section VII of the TILA–RESPA
Integration Proposal contained the
Bureau’s preliminary analysis under
section 1022(b)(2)(A) of the Dodd-Frank
Act of the potential benefits and costs of
the proposed rule to consumers and
covered persons (as defined in DoddFrank Act section 1002(6), 12 U.S.C.
5481(6)), including the potential
reduction of access by consumers to
consumer financial products or services;
the impact on depository institutions
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and credit unions with $10 billion or
less in total assets as described in
section 1026 of the Dodd-Frank Act; and
the impact on consumers in rural areas
(the Preliminary Section 1022(b)(2)
Analysis).20 In the Preliminary Section
1022(b)(2) Analysis, the Bureau
addressed the impact of the proposed
delay of the Affected Title XIV
Disclosures on covered persons and
consumers. See section VII.D.8 of the
TILA–RESPA Integration Proposal.
There, the Bureau noted that the
proposed rule would exempt creditors
temporarily from compliance with
certain new disclosure requirements
added to TILA and RESPA by the DoddFrank Act until such final rule takes
effect. Although the Dodd-Frank Act
does not specifically require inclusion
of the Affected Title XIV Disclosures in
the TILA–RESPA integrated disclosures,
the Bureau stated in the TILA–RESPA
Integration Proposal that it believes
these disclosures should be included in
the integrated disclosures because doing
so would improve the overall
effectiveness of the integrated
disclosures, which may benefit
consumers and covered persons, and
also reduce burden on covered persons.
See 77 FR 51116, 51279. The Bureau
further stated that making the
requirements to provide the Affected
Title XIV Disclosures become effective
simultaneously with the TILA–RESPA
integrated disclosures would avoid
unnecessary regulatory burden by
preventing creditors from having to
implement multiple iterations of
disclosure rules. Lastly, the Bureau
stated that it did not anticipate
additional costs to covered persons as a
result of delayed implementation of the
Affected Title XIV Disclosures, although
covered persons may incur additional
recurring costs associated with
calculating and disclosing this
additional information to consumers
once the implementing rules take effect.
See 77 FR 51116, 51279–80. As
discussed above, this final rule
20 See 77 FR 51116, 51267. The Bureau stated that
in developing the proposed rule, the Bureau had
considered potential benefits, costs, and impacts,
and had consulted or offered to consult with the
prudential regulators, the Department of Housing
and Urban Development, and the Federal Trade
Commission, including regarding consistency with
any prudential, market, or systemic objectives
administered by such agencies. The Bureau also
held discussions with or solicited feedback from the
United States Department of Agriculture Rural
Housing Service, the Farm Credit Administration,
the Federal Housing Administration, the Federal
Housing Finance Agency, and the Department of
Veterans Affairs regarding the potential impacts of
the proposed rule on those entities’ loan programs.
Id. In addition, prior to finalizing the rule, the
Bureau consulted or offered to consult with the
appropriate prudential regulators and Federal
agencies regarding this final rule.
PO 00000
Frm 00008
Fmt 4700
Sfmt 4700
effectively delays implementation of
certain disclosure requirements and
thus, consumers will not receive the
information provided in such
disclosures as early as they would have
if the statutory requirements had
become self-effective pursuant to DoddFrank Act section 1400(c). However, the
Bureau believes that these disclosures
are of lesser value to consumers without
the comprehensive reform of the
integrated TILA–RESPA disclosures. In
addition, any benefits that consumers
would derive from allowing the
statutory requirements to take effect
prior to the TILA–RESPA integrated
disclosures would only accrue during
the time between when the
requirements would take effect and
when the TILA–RESPA integrated
disclosure requirements would be
finalized.
The baseline for analysis in this final
Dodd-Frank Act section 1022(b)(2)
analysis is a post-statutory baseline
analysis. The Preliminary Section
1022(b)(2) Analysis used a pre-statutory
baseline, i.e., it analyzed the benefits,
costs, and impacts of the proposed
temporary exemption against a prestatutory baseline. The Bureau believes
a post-statutory baseline more fully
informs the rulemaking and is more
appropriate for the distinct nature of
this final rule—to prevent effectively
certain statutory disclosure
requirements from becoming selfeffective. The Bureau has discretion in
future rulemakings to choose the most
appropriate baseline for each particular
rulemaking.
The Bureau did not receive any
comments on the Bureau’s Preliminary
Section 1022(b)(2) Analysis regarding
the effect of the proposed delay of
implementing the Affected Title XIV
Disclosures on covered persons and
consumers. The Bureau also believes
that delaying implementation of the
Post-Consummation Escrow
Cancellation Disclosure and, instead,
implementing the disclosure along with
the TILA–RESPA integrated disclosures
would avoid unnecessary regulatory
burden by preventing covered persons
from having to implement multiple
iterations of disclosure rules. The
Bureau does not anticipate additional
costs to covered persons as a result of
such delayed implementation of the
Post-Consummation Escrow
Cancellation Disclosure, although
covered persons may incur additional
recurring costs associated with
calculating and disclosing this
additional information to consumers
once the implementing rules take effect.
In light of this, the Bureau concludes,
using a post-statutory baseline, that the
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emcdonald on DSK7TPTVN1PROD with RULES
final rule will have the benefits, costs,
and impacts on covered persons and
consumers that were discussed in the
Preliminary Section 1022(b)(2) Analysis.
This final rule does not have the
potential to reduce access by consumers
to consumer financial products or
services, as it will not increase costs on
covered persons. In addition, as noted
above, because this rule effectively
delays the implementation of disclosure
requirements, it will cause no additional
costs on depository institutions and
credit unions with $10 billion or less in
total assets, as described in section 1026
of the Dodd-Frank Act. Further, it will
have no significant or adverse impact on
consumers in rural areas, as it does not
increase costs for covered persons or
consumers. The Bureau believes that
delaying the implementation of the
Affected Title XIV Disclosures and the
Post-Consummation Escrow
Cancellation Disclosure will eliminate
the costs that covered persons would
have incurred if they had to implement
the disclosure provisions multiple
times, i.e., if these statutory provisions
had taken effect by operation of law
pursuant to Dodd-Frank Act section
1400(c)(3) and were also later
implemented through the TILA–RESPA
integration final rule (including
potential increased compliance costs
due to uncertainty of complying with
statutory provisions without
implementing regulations).
VII. Regulatory Flexibility Act
The Bureau’s TILA–RESPA
Integration Proposal included an initial
regulatory flexibility analysis (IRFA)
discussing the potential impact of the
Bureau’s regulations on small entities,
including small businesses, under the
Regulatory Flexibility Act (RFA). See 77
FR 51116, 51282. Among other issues,
the IRFA discussed how the proposed
rule would exempt creditors
temporarily from compliance with
certain new disclosure requirements
added to TILA and RESPA by the DoddFrank Act until the integrated TILA–
RESPA rule takes effect. See 77 FR
51116, 51293. The Bureau stated in the
IRFA that, although the Dodd-Frank Act
does not specifically require inclusion
of all of these new disclosures in the
integrated disclosures, the Bureau
believes these disclosures should be
included in the integrated disclosures
because doing so would improve the
overall effectiveness of the integrated
disclosures, which may benefit
consumers and covered persons that are
small entities, and also reduce burden
on covered persons that are small
entities. The Bureau provided in the
IRFA that finalizing the rules
VerDate Mar<15>2010
12:46 Nov 21, 2012
Jkt 229001
implementing these title XIV
disclosures simultaneously with the
final TILA–RESPA rule would avoid
unnecessary regulatory burden by
preventing creditors that are small
entities from having to implement
multiple iterations of disclosure rules.
The Bureau stated in the IRFA that it
does not anticipate additional costs to
covered persons as a result of delayed
implementation of the new disclosure
requirements, although small entities
may incur additional recurring costs
associated with calculating and
disclosing this additional information to
consumers once the implementing rules
take effect. Id. The Bureau also noted in
the IRFA that incorporating the Affected
Title XIV Disclosures into the TILA–
RESPA integrated disclosures was being
proposed to avoid duplication, overlaps,
and conflicts. See 77 FR 51116, 51294.
The Bureau did not receive any
comments on the conclusions that the
Bureau made in the IRFA regarding the
effect on small entities of the proposed
delay of implementing the Affected
Title XIV Disclosures. The Bureau also
believes that delaying implementation
of the Post-Consummation Escrow
Cancellation Disclosure to implement it
simultaneously with the TILA–RESPA
integration final rulemaking will avoid
unnecessary regulatory burden by
preventing covered persons that are
small entities from having to implement
multiple iterations of disclosure rules.
The Bureau does not anticipate
additional costs as a result of delayed
implementation of the PostConsummation Escrow Cancellation
Disclosure, although small entities may
incur additional recurring costs
associated with calculating and
disclosing this additional information to
consumers once the implementing rules
take effect. Id. The Bureau also believes
that synchronizing the format and
content of the Post-Consummation
Escrow Cancellation Disclosure with the
Pre-Consummation Escrow Waiver
Disclosure and the integrated TILA–
RESPA disclosures avoids duplication,
overlaps, and conflicts with other
Federal rules. See 77 FR 51116, 51294.
Accordingly, because this final rule,
which the Bureau is issuing separately
from the other parts of the TILA–RESPA
Integration Proposal, will not create
additional costs for covered persons that
are small entities, the undersigned
certifies that it will not have a
significant economic impact on a
substantial number of small entities.
Therefore, an analysis under the RFA is
not required for this final rule. However,
the factors required in such an analysis
are addressed below for informational
purposes.
PO 00000
Frm 00009
Fmt 4700
Sfmt 4700
70113
The Bureau has concluded that the
final rule will impose, subject to a poststatutory baseline, the impacts on small
entities that were discussed in the IRFA.
The delay of the implementation of the
Affected Title XIV Disclosures and the
Post-Consummation Escrow
Cancellation Disclosure, so that they
may be implemented with the integrated
TILA–RESPA disclosures, will improve
the integrated disclosures, which may
benefit consumers and small entities,
and avoid unnecessary regulatory
burden by preventing covered persons
that are small entities from having to
implement multiple iterations of
disclosure rules.
As described in the TILA–RESPA
Integration Proposal, the Bureau
estimates the final rule to affect small
entities that are engaged in closed-end
mortgage transactions that are
commercial banks and savings
associations, credit unions, non-bank
mortgage lenders, mortgage brokers, and
settlement agents, totaling about 26,000
small entities.21 This rule provides an
exemption and, therefore, does not
contain any reporting, recordkeeping, or
other requirements. The Bureau has
reviewed possible steps to minimize the
impact on small entities in connection
with the TILA–RESPA Integration
Proposal. As the nature of this final rule
is an exemption, it is itself a step taken
to minimize impact on small entities (as
opposed to the alternative of letting the
statutory disclosure provisions become
self-effective). The final rule covers all
small entities subject to the statutory
provisions, because the final rule
applies to persons generally.
In sum, this final rule will eliminate
the costs that covered small entities
would have incurred if they had to
implement the disclosure provisions
multiple times, i.e., if these statutory
provisions had taken effect by operation
of law pursuant to Dodd-Frank Act
section 1400(c)(3) and were also later
implemented through the TILA–RESPA
integration final rule (including
potential increased compliance costs
due to uncertainty of complying with
statutory provisions without
implementing regulations).
VIII. Paperwork Reduction Act
The Bureau has determined that this
final rule does not impose any new
recordkeeping, reporting, or disclosure
requirements on covered persons or
members of the public that would be
collections of information requiring
OMB approval under the Paperwork
Reduction Act (PRA), 44 U.S.C. 3501, et
seq. Rather, the final rule defers certain
21 See
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77 FR 51116, 51285–6.
23NOR1
70114
Federal Register / Vol. 77, No. 226 / Friday, November 23, 2012 / Rules and Regulations
information collection requirements
subject to the PRA until such time as the
TILA–RESPA integrated disclosure final
rule, and the corresponding information
collection requirements, becomes
effective. The Bureau did not receive
any comments related to this exemption
under the PRA.
List of Subjects in 12 CFR Part 1026
Supplement I to Part 1026—Official
Interpretations
Advertising, Consumer protection,
Credit, Credit unions, Mortgages,
National banks, Recordkeeping
requirements, Reporting, Savings
associations, Truth in lending.
*
1. The authority citation for part 1026
is revised to read as follows:
■
Authority: 12 U.S.C. 2601; 2603–2605,
2607, 2609, 2617, 5511, 5512, 5532, 5581; 15
U.S.C. 1601 et seq.
2. Section 1026.1 is amended by
revising paragraph (a) and adding
paragraph (c)(5) to read as follows:
■
§ 1026.1 Authority, purpose, coverage,
organization, enforcement, and liability.
emcdonald on DSK7TPTVN1PROD with RULES
*
*
*
PART 1026—TRUTH IN LENDING
(REGULATION Z)
(a) Authority. This part, known as
Regulation Z, is issued by the Bureau of
Consumer Financial Protection to
implement the Federal Truth in Lending
Act, which is contained in title I of the
Consumer Credit Protection Act, as
amended (15 U.S.C. 1601 et seq.). This
part also implements title XII, section
1204 of the Competitive Equality
Banking Act of 1987 (Pub. L. 100–86,
101 Stat. 552). Furthermore, this part
implements certain provisions of the
Real Estate Settlement Procedures Act of
1974, as amended (12 U.S.C. 2601 et
seq.). The Bureau’s informationcollection requirements contained in
this part have been approved by the
Office of Management and Budget under
the provisions of 44 U.S.C. 3501 et seq.
and have been assigned OMB No. 3170–
0015 (Truth in Lending).
*
*
*
*
*
(c) * * *
(5) No person is required to provide
the disclosures required by sections
128(a)(16) through (19), 128(b)(4),
129C(f)(1), 129C(g)(2) and (3), 129C(h),
129D(h), 129D(j)(1)(A), or 129D(j)(1)(B)
of the Truth in Lending Act or section
4(c) of the Real Estate Settlement
Procedures Act.
*
*
*
*
*
Jkt 229001
*
Section 1026.1—Authority, Purpose,
Coverage, Organization, Enforcement
and Liability 1(c) Coverage
For the reasons stated in the
preamble, the Bureau amends
Regulation Z, 12 CFR part 1026, as set
forth below:
12:46 Nov 21, 2012
*
Subpart A—General
Authority and Issuance
VerDate Mar<15>2010
3. In Supplement I to Part 1026:
A. Under Section 1026.1—Authority,
Purpose, Coverage, Organization,
Enforcement and Liability, under
subheading 1(c) Coverage, add in
alphanumerical order the subheading
Paragraph 1(c)(5) and paragraph 1.
under that subheading.
The additions read as follows:
■
*
*
*
*
Paragraph 1(c)(5).
1. Temporary exemption. Section
1026.1(c)(5) implements sections
128(a)(16) through (19), 128(b)(4),
129C(f)(1), 129C(g)(2) and (3), 129C(h),
129D(h), 129D(j)(1)(A), and 129D(j)(1)(B)
of the Truth in Lending Act and section
4(c) of the Real Estate Settlement
Procedures Act, by exempting persons
from the disclosure requirements of
those sections. These exemptions are
intended to be temporary, lasting only
until regulations implementing the
integrated disclosures required by
sections 1032(f), 1098, and 1100A of the
Dodd-Frank Act (12 U.S.C. 5532(f), 12
U.S.C. 2603(a), 15 U.S.C. 1604(b))
become mandatory. Section 1026.1(c)(5)
does not exempt any person from any
other requirement of this part,
Regulation X (12 CFR part 1024), the
Truth in Lending Act, or the Real Estate
Settlement Procedures Act.
*
*
*
*
*
Dated: November 13, 2012.
Richard Cordray,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2012–28341 Filed 11–21–12; 8:45 am]
BILLING CODE 4810–AM–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2012–0846; Directorate
Identifier 2012–CE–021–AD; Amendment
39–17237; AD 2012–22–01]
RIN 2120–AA64
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule.
AGENCY:
Frm 00010
Fmt 4700
This AD is effective December
28, 2012.
Director of the Federal Register
approved the incorporation by reference
of a certain other publication listed in
this AD as of March 13, 2012 (77 FR
6003, February 7, 2012).
DATES:
For service information
identified in this AD, contact Cessna
Aircraft Company, Customer service,
P.O. Box 7706, Wichita, KS 67277;
telephone: (316) 517–5800; fax: (316)
517–7271; Internet: https://www.
cessnasupport.com. You may review
copies of the referenced service
information at the FAA, Small Airplane
Directorate, 901 Locust, Kansas City,
MO 64106. For information on the
availability of this material at the FAA,
call (816) 329–4148.
ADDRESSES:
Examining the AD Docket
You may examine the AD docket on
the Internet at https://www.regulations.
gov; or in person at the Docket
Management Facility between 9 a.m.
and 5 p.m., Monday through Friday,
except Federal holidays. The AD docket
contains this AD, the regulatory
evaluation, any comments received, and
other information. The address for the
Docket Office (phone: 800–647–5527) is
Document Management Facility, U.S.
Department of Transportation, Docket
Operations, M–30, West Building
Ground Floor, Room W12–140, 1200
New Jersey Avenue SE., Washington,
DC 20590.
Jeff
Janusz, Aerospace Engineer, Wichita
Aircraft Certification Office, FAA, 1801
S. Airport Road, Room 100, Wichita,
Kansas 67209; phone: (316) 946–4148;
fax: (316) 946–4107; email: jeff.janusz@
faa.gov.
FOR FURTHER INFORMATION CONTACT:
Airworthiness Directives; Cessna
Aircraft Company Airplanes
PO 00000
We are adopting a new
airworthiness directive (AD) for certain
Cessna Aircraft Company Models 172R
and 172S airplanes. This AD was
prompted by reports of chafed fuel
return line assemblies, which were
caused by the fuel return line assembly
rubbing against the right steering tube
assembly during full rudder pedal
actuation. This AD requires you to
inspect the fuel return line assembly for
chafing; replace the fuel return line
assembly if chafing is found; inspect the
clearance between the fuel return line
assembly and both the right steering
tube assembly and the airplane
structure; and adjust as necessary. We
are issuing this AD to correct the unsafe
condition on these products.
SUMMARY:
Sfmt 4700
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]]>Agencies
[Federal Register Volume 77, Number 226 (Friday, November 23, 2012)]
[Rules and Regulations]
[Pages 70105-70114]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-28341]
=======================================================================
-----------------------------------------------------------------------
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1026
[Docket No. CFPB-2012-0045]
RIN 3170-AA32
Delayed Implementation of Certain New Mortgage Disclosures
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Final rule; official interpretation.
-----------------------------------------------------------------------
SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
amending Regulation Z (Truth in Lending) to, in effect, delay
implementation of certain new mortgage disclosure requirements in title
XIV of the Dodd-Frank Wall Street Reform and Consumer Protection Act
that would otherwise take effect on January 21, 2013. Instead, to avoid
potential consumer confusion and reduce compliance burden for industry,
the Bureau plans to implement these disclosures as part of the
integrated mortgage disclosure forms proposed earlier this year, which
combine certain disclosures that consumers receive in connection with
applying for and closing on a mortgage loan under the Truth in Lending
Act and the Real Estate Settlement Procedures Act. Accordingly, this
rulemaking exempts persons from complying with these mortgage
disclosure requirements and provides that such exemptions are intended
to last only until the integrated mortgage disclosure forms take
effect.
DATES: The rule is effective on November 23, 2012.
FOR FURTHER INFORMATION CONTACT: Michael G. Silver, Counsel; and
Richard B. Horn, Senior Counsel, Office of Regulations, Consumer
Financial Protection Bureau, 1700 G Street NW., Washington, DC 20552 at
(202) 435-7700.
SUPPLEMENTARY INFORMATION:
I. Overview
A. Dodd-Frank Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank Act), Public Law 111-203, amended the Real Estate
Settlement Procedures Act of 1974 (RESPA) and the Truth in Lending Act
(TILA) to mandate that the Bureau of Consumer Financial Protection
(Bureau) establish a single disclosure scheme for use by lenders or
creditors in complying with certain mortgage disclosure requirements
under both statutes.\1\ Sections 1098 and 1100A of the Dodd-Frank Act
amended RESPA section 4(a) and TILA section 105(b), respectively, to
require that the Bureau publish a single, integrated disclosure for
mortgage loan transactions (including real estate settlement cost
statements) which includes the disclosure requirements of TILA and
sections 4 and 5 of RESPA that, taken
[[Page 70106]]
together, may apply to a transaction that is subject to both or either
provisions of law. 12 U.S.C. 2603(a); 15 U.S.C. 1604(b). Section
1032(f) of the Dodd-Frank Act mandated that the Bureau propose for
public comment rules and model disclosures that integrate the TILA and
RESPA disclosures by July 21, 2012. 12 U.S.C. 5532(f). As noted below,
the Bureau satisfied this statutory mandate and issued proposed rules
and forms on July 9, 2012.\2\
---------------------------------------------------------------------------
\1\ RESPA and TILA historically have been implemented by
regulations of the Department of Housing and Urban Development (HUD)
under Regulation X and the Board of Governors of the Federal Reserve
System (the Board) under Regulation Z, respectively. The Dodd-Frank
Act generally consolidated and transferred these rulemaking
authorities to the Bureau.
\2\ See the Bureau's press release Consumer Financial Protection
Bureau proposes ``Know Before You Owe'' mortgage forms (July 9,
2012), available at https://www.consumerfinance.gov/pressreleases/consumer-financial-protection-bureau-proposes-know-before-you-owe-mortgage-forms/; the Bureau's blog post Know Before You Owe:
Introducing our proposed mortgage disclosure forms (July 9, 2012),
available at https://www.consumerfinance.gov/blog/know-before-you-owe-introducing-our-proposed-mortgage-disclosure-forms/.
---------------------------------------------------------------------------
In addition to the integrated disclosure requirements in title X of
the Dodd-Frank Act, various provisions of title XIV of the Dodd-Frank
Act amend TILA, RESPA, and other consumer financial laws to impose new
disclosure requirements for mortgage transactions (the Title XIV
Disclosures). These provisions generally require disclosure of certain
information when a consumer applies for a mortgage loan or shortly
before consummation of the loan, around the same time that consumers
will receive the TILA-RESPA integrated disclosures required by sections
1032(f), 1098, and 1100A of the Dodd-Frank Act (the TILA-RESPA
integrated disclosures), and after consummation of the loan if certain
events occur. Dodd-Frank Act title XIV provisions generally take effect
within 18 months after the designated transfer date (i.e., by January
21, 2013) unless final rules implementing those requirements are issued
on or before that date and provide for a different effective date
pursuant to Dodd-Frank Act section 1400(c)(3).\3\
---------------------------------------------------------------------------
\3\ Dodd-Frank Act section 1400(c)(3) is codified at 15 U.S.C.
1601 note.
---------------------------------------------------------------------------
The Title XIV Disclosures generally include the following:
Warning regarding negative amortization features. Dodd-
Frank Act section 1414(a); TILA section 129C(f)(1).\4\
---------------------------------------------------------------------------
\4\ Dodd-Frank Act section 1414(a) also added to TILA new
section 129C(f)(2), which requires first-time borrowers for certain
residential mortgage loans that could result in negative
amortization to provide the creditor with documentation to
demonstrate that the consumer received homeownership counseling from
organizations or counselors certified as competent to provide such
counseling by HUD. That provision is implemented in the Bureau's
proposal to implement Dodd-Frank Act requirements expanding
protections for ``high-cost'' mortgage loans under the Home
Ownership and Equity Protection Act of 1994 (HOEPA), pursuant to
TILA sections 103(bb) and 129, as amended by Dodd-Frank Act sections
1431 through 1433 (the 2012 HOEPA Proposal). 77 FR 49090 (Aug. 15,
2012). The 2012 HOEPA Proposal also implements the requirement of
RESPA section 5(c), added by section 1450 of the Dodd-Frank Act,
that lenders provide borrowers with a list of certified
homeownership counselors. The Bureau expects to issue a final rule
related to the 2012 HOEPA Proposal on or before January 21, 2013.
---------------------------------------------------------------------------
Disclosure of State law anti-deficiency protections. Dodd-
Frank Act section 1414(c); TILA section 129C(g)(2) and (3).
Disclosure regarding creditor's partial payment policy
prior to consummation and, for new creditors, after consummation. Dodd-
Frank Act section 1414(d); TILA section 129C(h).
Disclosure regarding mandatory escrow or impound accounts.
Dodd-Frank Act section 1461(a); TILA section 129D(h).
Disclosure prior to consummation regarding waiver of
escrow in connection with the transaction. Dodd-Frank Act section 1462;
TILA section 129D(j)(1)(A).
Disclosure regarding cancellation of escrow after
consummation. Dodd-Frank Act section 1462; TILA section 129D(j)(1)(B).
Disclosure of monthly payment, including escrow, at
initial and fully-indexed rate for variable-rate residential mortgage
loan transactions. Dodd-Frank Act section 1419; TILA section
128(a)(16).
Repayment analysis disclosure to include amount of escrow
payments for taxes and insurance. Dodd-Frank Act section 1465; TILA
128(b)(4).
Disclosure of aggregate amount of settlement charges,
amount of charges included in the loan and the amount of such charges
the borrower must pay at closing, the approximate amount of the
wholesale rate of funds, and the aggregate amount of other fees or
required payments in connection with a residential mortgage loan. Dodd-
Frank Act section 1419; TILA section 128(a)(17).
Disclosure of aggregate amount of mortgage originator fees
and the amount of fees paid by the consumer and the creditor. Dodd-
Frank Act section 1419; TILA section 128(a)(18).
Disclosure of total interest as a percentage of principal.
Dodd-Frank Act section 1419; TILA section 128(a)(19).
Optional disclosure of appraisal management company fees.
Dodd-Frank Act section 1475; RESPA section 4(c).
Disclosure regarding notice of reset of hybrid adjustable
rate mortgage. Dodd-Frank Act section 1418(a); TILA section 128A(b).
Loan originator identifier requirement. Dodd-Frank section
1402(a)(2); TILA section 129B(b)(1)(B).
Consumer notification regarding appraisals for higher-risk
mortgages. Dodd-Frank Act section 1471; TILA section 129H(d).
Consumer notification regarding the right to receive an
appraisal copy. Dodd-Frank Act section 1474; Equal Credit Opportunity
Act (ECOA) section 701(e)(5).
As noted in the list above, the Title XIV Disclosures include
certain disclosures that may need to be given both before and after
consummation. For example, the Title XIV Disclosures include
disclosures regarding a creditor's policy for acceptance of partial
loan payments both before consummation and, for persons who
subsequently become creditors for the transaction, after consummation
as required by new TILA section 129C(h), added by Dodd-Frank Act
section 1414(d).\5\ In addition, the Title XIV Disclosures include
disclosures for consumers who waive or cancel escrow services both
before and after consummation, added by Dodd-Frank Act section 1462.
Specifically, new TILA section 129D(j)(1)(A) requires a creditor or
servicer to provide a disclosure with the information set forth under
TILA section 129D(j)(2) when an impound, trust, or other type of
account for the payment of property taxes, insurance premiums, or other
purposes relating to real property securing a consumer credit
transaction is not established in connection with the transaction (the
Pre-Consummation Escrow Waiver Disclosure). New TILA section
129D(j)(1)(B) requires a creditor or servicer to provide disclosures
post-consummation with the information set forth under TILA section
129D(j)(2) when a consumer chooses, and provides written notice of the
choice, to close his or her escrow account established in connection
with a consumer credit transaction secured by real property in
accordance with any statute, regulation, or contractual agreement (the
Post-Consummation Escrow Cancellation Disclosure). 15 U.S.C.
1639d(j)(1)(A),
[[Page 70107]]
1639d(j)(1)(B). The statute sets forth an identical set of information
for both of these disclosures.\6\
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\5\ As it stated in the TILA-RESPA Integration Proposal, the
Bureau believes that to give effect to the legislative purpose of
section 1414(d) of the Dodd-Frank Act, the disclosure requirements
of TILA section 129C(h) should apply without regard to whether the
person would be a ``creditor'' under TILA and Regulation Z. See 77
FR 51116, 51265. For these reasons, in the TILA-RESPA Integration
Proposal, the Bureau proposed to retain the term ``covered person''
under Sec. 1026.39(a)(1) and its definition, which would subject
such covered persons to the proposed disclosure requirements. Id. As
in the TILA-RESPA Integration Proposal, in this final rule the
Bureau is temporarily exempting ``persons'' (as defined in
Regulation Z) rather than ``creditors'' from compliance with the
provisions of TILA section 129C(h), which includes covered persons.
\6\ The information set forth under TILA section 129D(j)(2)
includes information concerning any applicable fees or costs
associated with either the non-establishment of the escrow account
at the time of the transaction, or any subsequent closure of the
account; a clear and prominent statement that the consumer is
responsible for personally and directly paying the non-escrowed
items, in addition to paying the mortgage loan payment, in the
absence of any such account, and the fact that the costs for taxes,
insurance, and related fees can be substantial; a clear explanation
of the consequences of any failure to pay non-escrowed items,
including the possible requirement for the forced placement of
insurance by the creditor or servicers and the potentially higher
cost (including any potential commission payments to the servicer)
or reduced coverage for the consumer in the event of any such
creditor-placed insurance; and other information the Bureau
determines is necessary for consumer protection. 15 U.S.C.
1639d(j)(2).
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B. TILA-RESPA Integration Proposal
On July 9, 2012, the Bureau issued a proposal requesting comment on
proposed rules and forms to integrate certain disclosure requirements
of TILA and RESPA for most closed-end consumer credit transactions
secured by real property (the TILA-RESPA Integration Proposal), as
required by sections 1032(f), 1098, and 1100A of the Dodd-Frank Act.\7\
The proposed rule would amend the Bureau's Regulation X, 12 CFR part
1024, and Regulation Z, 12 CFR part 1026. The proposal was published in
the Federal Register on August 23, 2012. 77 FR 51116 (Aug. 23, 2012).
---------------------------------------------------------------------------
\7\ See the Bureau's press release Consumer Financial Protection
Bureau proposes ``Know Before You Owe'' mortgage forms (July 9,
2012), available at https://www.consumerfinance.gov/pressreleases/consumer-financial-protection-bureau-proposes-know-before-you-owe-mortgage-forms/; the Bureau's blog post Know Before You Owe:
Introducing our proposed mortgage disclosure forms (July 9, 2012),
available at https://www.consumerfinance.gov/blog/know-before-you-owe-introducing-our-proposed-mortgage-disclosure-forms/.
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Among other things, the TILA-RESPA Integration Proposal requested
comment on an amendment to Sec. 1026.1(c) of Regulation Z that would
temporarily exempt persons from compliance with the following Title XIV
Disclosures (collectively, the Affected Title XIV Disclosures) so that
the disclosures could instead be incorporated into the TILA-RESPA
integrated disclosures that would be finalized in the future:
Warning regarding negative amortization features. Dodd-
Frank Act section 1414(a); TILA section 129C(f)(1).
Disclosure of State law anti-deficiency protections. Dodd-
Frank Act section 1414(c); TILA section 129C(g)(2) and (3).
Disclosure regarding creditor's partial payment policy
prior to consummation and, for new creditors, after consummation. Dodd-
Frank Act section 1414(d); TILA section 129C(h).
Disclosure regarding mandatory escrow or impound accounts.
Dodd-Frank Act section 1461(a); TILA section 129D(h).
Disclosure prior to consummation regarding waiver of
escrow in connection with the transaction. Dodd-Frank Act section 1462;
TILA section 129D(j)(1)(A).
Disclosure of monthly payment, including escrow, at
initial and fully-indexed rate for variable-rate residential mortgage
loan transactions. Dodd-Frank Act section 1419; TILA section
128(a)(16).
Repayment analysis disclosure to include amount of escrow
payments for taxes and insurance. Dodd-Frank Act section 1465; TILA
128(b)(4).
Disclosure of aggregate amount of settlement charges,
amount of charges included in the loan and the amount of such charges
the borrower must pay at closing, the approximate amount of the
wholesale rate of funds, and the aggregate amount of other fees or
required payments in connection with a residential mortgage loan. Dodd-
Frank Act section 1419; TILA section 128(a)(17).
Disclosure of aggregate amount of mortgage originator fees
and the amount of fees paid by the consumer and the creditor. Dodd-
Frank Act section 1419; TILA section 128(a)(18).
Disclosure of total interest as a percentage of principal.
Dodd-Frank Act section 1419; TILA section 128(a)(19).
Optional disclosure of appraisal management company fees.
Dodd-Frank Act section 1475; RESPA section 4(c).
The TILA-RESPA Integration Proposal provided for a bifurcated
comment process. Comments regarding the proposed amendments to Sec.
1026.1(c) were required to have been received on or before September 7,
2012. For all other proposed amendments and comments pursuant to the
Paperwork Reduction Act, comments were required to have been received
on or before November 6, 2012.\8\
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\8\ In its initial Federal Register notice, the Bureau also
applied the September 7, 2012 deadline to comments on the proposed
amendments to the definition of finance charge in Sec. 1026.4. On
August 31, 2012, however, the Bureau issued a notice extending the
deadline for such comments to November 6, 2012. See the Bureau's
blog post, More time for comments on proposed changes to the
definition of the finance charge (August 31, 2012), available at
https://www.consumerfinance.gov/blog/more-time-for-comments-on-proposed-changes-to-the-definition-of-the-finance-charge/. The
extension was published in the Federal Register on September 6,
2012. See 77 FR 54843 (Sept. 6, 2012). It did not change the comment
period for any other aspects of the TILA-RESPA Integration Proposal,
which, as noted above, ended November 6, 2012.
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C. 2011 Escrows Proposal
Sections 1461 and 1462 of the Dodd-Frank Act create new TILA
section 129D, which substantially codifies requirements that the Board
had previously adopted in Regulation Z regarding escrow requirements
for higher-priced mortgage loans, but also adds disclosure requirements
and lengthens the period for which escrow accounts are required. 15
U.S.C. 1639d. On March 2, 2011, the Board proposed amendments to
Regulation Z implementing certain requirements of sections 1461 and
1462 of the Dodd-Frank Act. 76 FR 11598 (Mar. 2, 2011) (2011 Escrows
Proposal). The Board proposed, among other things, to implement the
disclosure requirements under TILA section 129D(j)(1) in Regulation Z
under a new Sec. 226.19(f)(2)(ii) and Sec. 226.20(d) of the Board's
Regulation Z, including both the Pre-Consummation Escrow Waiver
Disclosure and the Post-Consummation Escrow Cancellation Disclosure.
The comment period for the 2011 Escrows Proposal closed on May 2,
2011. The Board did not finalize the 2011 Escrows Proposal. Subsequent
to the issuance of the 2011 Escrows Proposal, the authority for
finalizing the proposal was transferred to the Bureau pursuant to the
Dodd-Frank Act.\9\
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\9\ Effective July 21, 2011, the Dodd-Frank Act generally
transferred rulemaking authority for TILA to the Bureau (except for
certain rulemaking authority over motor vehicle dealers that remains
with the Board). See sections 1061 and 1100A of the Dodd-Frank Act.
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II. Summary of Proposed Rule and Comments
A. Affected Title XIV Disclosures
As described above, the Affected Title XIV Disclosures impose
certain new disclosure requirements for mortgage transactions. Section
1400(c)(3) of the Dodd-Frank Act \10\ provides that, if regulations
implementing the Affected Title XIV Disclosures are not issued on the
date that is 18 months after the designated transfer date (i.e., by
January 21, 2013), the statutory requirements will take effect on that
date.
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\10\ Codified at 15 U.S.C. 1601 note.
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The Bureau provided in the TILA-RESPA Integration Proposal that it
believed that implementing integrated disclosures that satisfy the
applicable sections of TILA and RESPA and the Affected Title XIV
Disclosures would benefit consumers and facilitate compliance for
industry with TILA and RESPA. The Bureau provided further that
consumers would benefit from a consolidated disclosure that conveys
loan terms and costs to consumers in a
[[Page 70108]]
coordinated way, and industry would benefit by integrating two sets of
overlapping disclosures into a single form and by avoiding regulatory
burden associated with revising systems and practices multiple times.
77 FR 51116, 51133.
However, given the broad scope and complexity of TILA-RESPA
Integration Proposal and the 120-day comment period provided, the
Bureau stated that it believed a final rule would not be issued by
January 21, 2013. The Bureau was concerned that absent a final rule
implementing the Affected Title XIV Disclosures, institutions would
have to comply with those disclosures beginning January 21, 2013 due to
the statutory requirement that any section of Dodd-Frank Act title XIV
for which regulations have not been issued by January 21, 2013 are
self-effectuating as of that date. The Bureau stated that this likely
would result in widely varying approaches to compliance in the absence
of regulatory guidance, creating confusion for consumers, and would
impose a significant burden on industry. For example, this could result
in a consumer who shops for a mortgage loan receiving different
disclosures from different creditors. The Bureau noted that it believed
such disclosures would not only be unhelpful to consumers, but likely
would be confusing since the same disclosures would be provided in
widely different ways, and, moreover, implementing the Affected Title
XIV Disclosures separately from the TILA-RESPA integrated disclosures
would increase compliance costs and burdens on industry. The Bureau
also noted in the TILA-RESPA Integration Proposal that nothing in the
Dodd-Frank Act itself or its legislative history suggests that Congress
contemplated how the separate requirements in titles X and XIV would
work together.\11\
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\11\ As the Bureau stated in the TILA-RESPA Integration
Proposal, certain of the Affected Title XIV Disclosures indicate
that Congress did not intend for those disclosure requirements and
the TILA-RESPA integrated disclosures to operate independently. For
example, Dodd-Frank Act section 1419 amended paragraphs (a)(16)
through (19) of TILA section 128 to require additional content on
the disclosure provided to consumers within three days of
application and in final form at or before consummation. 15 U.S.C.
1638(a)(16) through (19). Pursuant to TILA section 128(b)(1), for
residential mortgage transactions, all disclosures required by TILA
section 128(a) must be ``conspicuously segregated'' from all other
information provided in connection with the transaction. 15 U.S.C.
1638(b)(1). Therefore, the Bureau stated that these sections are
directly implicated by the integrated TILA-RESPA requirement. 77 FR
51116, 51133.
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Accordingly, in the TILA-RESPA Integration Proposal, the Bureau
proposed to implement the Affected Title XIV Disclosures for purposes
of Dodd-Frank Act section 1400(c) by providing a temporary exemption
from the requirement to comply with such requirements such that they
would not become self-effective on January 21, 2013, and instead would
be required at the time the TILA-RESPA integrated disclosure
requirements become effective.\12\ The Bureau proposed such temporary
exemption pursuant to its authority under TILA sections 105(a) and
105(f), RESPA section 19(a), Dodd-Frank Act section 1032(a) and, for
residential mortgage loans, Dodd-Frank Act section 1405(b). The Bureau
explained that fully implementing the Affected Title XIV Disclosures as
part of the broader integrated TILA-RESPA rulemaking, rather than
issuing rules implementing each requirement individually or allowing
those statutory provisions to take effect by operation of law, will
improve the overall effectiveness of the integrated disclosures for
consumers and reduce burden on industry.
---------------------------------------------------------------------------
\12\ Id.
---------------------------------------------------------------------------
Specifically, as set forth in the section-by-section analysis to
proposed Sec. 1026.1(c) in the TILA-RESPA Integration Proposal, the
Bureau proposed to delay those requirements by temporarily exempting
persons from the requirement to comply on January 21, 2013.\13\ The
Bureau stated in the TILA-RESPA Integration Proposal that it would
remove this regulatory exemption in the final rule implementing the
TILA-RESPA integrated disclosures. The proposed exemption would be, in
effect, a delay of the effective date of the Affected Title XIV
Disclosures.
---------------------------------------------------------------------------
\13\ 77 FR 51116, 51134.
---------------------------------------------------------------------------
B. Other Title XIV Disclosures
The Bureau proposed to exclude the following Title XIV Disclosures
from the list of Affected Title XIV Disclosures in the TILA-RESPA
Integration Proposal, stating they would be implemented in separate
rulemakings:
Disclosure regarding notice of reset of hybrid adjustable
rate mortgage. Dodd-Frank Act section 1418(a); TILA section 128A(b).
Loan originator identifier requirement. Dodd-Frank section
1402(a)(2); TILA section 129B(b)(1)(B).
Consumer notification regarding appraisals for higher-risk
mortgages. Dodd-Frank Act section 1471; TILA section 129H(d).
Consumer notification regarding the right to receive an
appraisal copy. Dodd-Frank Act section 1474; ECOA section 701(e)(5).
Post-Consummation Escrow Cancellation Disclosure. Dodd-
Frank Act section 1462; TILA section 129D(j)(1)(B).
The Bureau stated generally that these disclosures were expected to
be proposed separately in summer 2012 and finalized by January 21,
2013. However, the Post-Consummation Escrow Cancellation Disclosure was
excluded from the list of Affected Title XIV Disclosures, in part,
because the Bureau stated it ``will be implemented by final rule
pursuant to an outstanding proposal published by the Board,'' referring
to the Board's 2011 Escrows Proposal.\14\
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\14\ 77 FR 51116, 51134.
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The Bureau proposed to delay the Affected Title XIV Disclosures to
the fullest extent those requirements could apply under the statutory
provisions, including to transactions not covered by the proposed
integrated disclosure provisions, including open-end credit plans,
transactions secured by dwellings that are not real property, and
reverse mortgages. The Bureau specifically solicited comment on this
scope of the exemption of the Affected Title XIV Disclosures. The
Bureau also solicited comment on whether the regulatory exemption
should sunset on a specific date, rather than provide an exemption
until a final rule for the integrated disclosures becomes effective.
C. Comments on the Proposed Amendments to Section 1026.1(c)
As of September 7, 2012, the Bureau had received nearly 500
comments on the TILA-RESPA Integration Proposal from depository
institutions, credit unions, settlement agents, mortgage brokers,
mortgage brokerage companies, industry trade groups, consumers,
consumer advocacy organizations, a State attorney general, Government-
Sponsored Enterprises (GSEs), and other sources. More than 20 of these
comments specifically addressed the Bureau's proposed delay of the
Affected Title XIV Disclosures, and those commenters were unanimously
supportive of a temporary exemption from the Affected Title XIV
Disclosures until the TILA-RESPA integrated disclosure rulemaking is
finalized. Several industry commenters and their trade groups stated
that this approach would result in disclosures that are more useful for
consumers and would facilitate compliance for financial institutions by
delaying compliance until a comprehensive implementation of all such
rules could be accomplished. A State attorney general commented in
support of this delayed implementation
[[Page 70109]]
of the Affected Title XIV Disclosures, stating that it would allow
business entities the time to make extensive changes to their software
and retrain staff in order to comply with the new integrated disclosure
requirements.
A number of commenters urged the Bureau to delay implementation of
other Title XIV Disclosures or otherwise addressed the Title XIV
Disclosures more generally. One mortgage company expressly urged the
Bureau to delay implementation of the other Title XIV Disclosures
(which include the Post-Consummation Escrow Cancellation Disclosure) in
addition to the Affected Title XIV Disclosures. A national trade
association for credit unions encouraged the Bureau to use its
exemption authority under the Dodd-Frank Act, TILA, and RESPA to the
fullest extent permissible to relieve regulatory burdens for credit
unions. Several state-level trade associations for credit unions urged
the Bureau to finalize all Regulation Z rulemakings at the same time. A
GSE noted the benefits of implementing rules in a manner that would
necessitate only a one-time change for software and other systems. One
trade association supported the proposal to delay implementation of the
Affected Title XIV Disclosures and urged the Bureau to clarify in the
final rule its reasoning for exercising its exemption authority under
section 1032(a) of the Dodd-Frank Act to specifically incorporate the
considerations in section 1032(c) of the Dodd-Frank Act. Two trade
associations commented that the Bureau should make clear that proposed
Sec. 1026.1(c) is a rule in ``final form'' pursuant to section
1400(c)(1) of the Dodd-Frank Act and that such a rule prevents the
triggering of section 1400(c)(3) of the Dodd-Frank Act.
Several industry trade associations were opposed to a sunset of the
regulatory exemption on a specific date and instead, were in favor of
the exemption existing until the TILA-RESPA integrated disclosures
final rule becomes effective. These industry trade group commenters
were concerned that a specific sunset date may precede the effective
date for the TILA-RESPA integration final rule. Removing the exemption
at the same time as implementing the TILA-RESPA integrated disclosures
would, in their view, reduce unnecessary disruption and provide
regulatory certainty.
In addition, the Bureau did not receive any comments in favor of
limiting the scope of the temporary exemptions, such that the
disclosure requirements would become self-effective for the types of
loans that are not subject to the TILA-RESPA integrated disclosure
requirements in the TILA-RESPA Integration Proposal. One national trade
association representing the reverse mortgage industry commented in
support of exemptions from the Affected Title XIV Disclosures for
reverse mortgage loans. A national trade association representing banks
and bank holding companies that provide retail financial services
commented that the exemption should also apply to the fullest extent
under the statute, and not be limited to the loans subject the TILA-
RESPA integrated disclosure requirements as proposed. The trade
association specifically stated that many banks use similar systems for
home equity lines of credit, reverse mortgages, and loans secured by
dwellings that are not real property and noted that including them in
the exemption would allow banks to implement the disclosure
requirements in a coordinated manner. A trade association representing
financial institutions in a particular State also commented in favor of
the full scope of the temporary exemption.
D. Board's 2011 Escrows Proposal for the Post-Consummation Escrow
Cancellation Disclosure
The 2011 Escrows Proposal proposed to implement the Pre-
Consummation Escrow Waiver Disclosure required under TILA section
129D(j)(1)(A) and the Post-Consummation Escrow Cancellation Disclosure
required under TILA section 129D(j)(1)(B).\15\ The content requirements
set forth in TILA section 129D(j)(2) are the same for the Pre-
Consummation Escrow Waiver Disclosure and the Post-Consummation Escrow
Cancellation Disclosure. The 2011 Escrows Proposal proposed model forms
for both disclosures. Under the 2011 Escrows Proposal, the disclosures
would be required to be delivered at least three business days before
consummation or cancellation of the existing escrow account after
consummation, as applicable. The proposed disclosures would explain
what an escrow account is; how it works; and the risk of not having an
escrow account. It also would state the potential consequences of
failing to pay home-related costs such as taxes and insurance in the
absence of an escrow account. In addition, it would state why there
will be no escrow account or why it is being cancelled, as applicable;
the amount of any fee imposed for not having an escrow account; and how
the consumer can request that an escrow account be established or left
in place, along with any deadline for such requests.\16\
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\15\ 76 FR 11598.
\16\ 76 FR 11598, 11599.
---------------------------------------------------------------------------
The Board received approximately 70 comments to the 2011 Escrows
Proposal, of which roughly a dozen addressed the timing of the
implementation of the Post-Consummation Escrow Cancellation Disclosure.
Specifically, national industry trade associations, State industry
trade associations, large depository institutions, and community banks
urged the Board to delay implementation of the Dodd-Frank Act escrow
disclosure requirements until the Bureau had authority over the
disclosures or until the Bureau could finalize the escrow disclosure
requirements along with the TILA-RESPA integrated disclosures. These
commenters stated that harmonizing the rulemakings would allow for a
comprehensive approach and avoid duplicative forms and repetitive
rulemakings. One industry trade association commented that it would be
``premature'' and ``potentially counterproductive'' to issue new escrow
rules prior to the completion of the TILA-RESPA integrated disclosures,
and therefore recommended that the Board delay finalizing the escrow
rules to allow the Bureau to incorporate the Dodd-Frank Act's escrow
amendments into the TILA-RESPA integrated disclosures.
As noted above, the Bureau proposed, as part of the TILA-RESPA
Integration Proposal, to provide a temporary exemption from compliance
with the TILA section 129D(j)(1)(A), which requires the Pre-
Consummation Escrow Waiver Disclosure. The Bureau did not propose to
effectively delay the Post-Consummation Escrow Cancellation Disclosure
in the TILA-RESPA Integration Proposal, and instead stated it would
implement the statute, TILA section 129D(j)(1)(B), by final rule
pursuant to the Board's 2011 Escrows Proposal. Absent the Bureau's
issuance of a final rule implementing TILA section 129D(j)(1)(B) by
January 21, 2013, the provision would go into effect as of such date by
operation of law under the Dodd-Frank Act section 1400(c)(3).\17\
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\17\ As described under part IV below, the Bureau considers an
exemption from the disclosure requirement under TILA section
129D(j)(1)(B), such as that proposed in the TILA-RESPA Integration
Proposal for the Affected Title XIV Disclosures, to be the issuance
of a regulation implementing that provision for purposes of Dodd-
Frank Act section 1400(c)(3).
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[[Page 70110]]
III. Summary of the Final Rule
The final rule implements the Affected Title XIV Disclosures and
the Post-Consummation Escrow Cancellation Disclosure in Sec. 1026.1(c)
of Regulation Z and provides for a temporary exemption for persons from
these statutory disclosure requirements. The Bureau is issuing this
final rule implementing the Affected Title XIV Disclosures and the
Post-Consummation Escrow Cancellation Disclosure prior to the statutory
provisions becoming self-effectuating on January 21, 2013. Accordingly,
persons will not be required to comply with these statutory disclosure
requirements until such time as the Bureau removes the exemption, which
it plans to do in the final rule for the TILA-RESPA integrated
disclosures, and such removal takes effect.
IV. Legal Authority
The Bureau is exercising its authority under and consistent with
TILA section 105(a) and (f), RESPA section 19(a), Dodd-Frank section
1032(a), and, for residential mortgage loans, Dodd-Frank Act section
1405(b) to, in effect, delay the effective date of the Affected Title
XIV Disclosures and the Post-Consummation Escrow Cancellation
Disclosure by exempting regulated persons from these provisions until a
final rule for the TILA-RESPA integrated disclosures mandated by Dodd-
Frank Act sections 1032(f), 1098 and 1100A takes effect. 15 U.S.C.
1604(a), 1604(f); 12 U.S.C. 2617(a); 12 U.S.C. 5532(a); 15 U.S.C. 1601
note. TILA section 105(a) gives the Bureau authority to adjust or
except from the disclosure requirements of TILA all or any class of
transactions to effectuate the purposes of TILA, to prevent
circumvention or evasion thereof, or facilitate compliance therewith.
As set forth above and below, delaying the Affected Title XIV
Disclosures and the Post-Consummation Escrow Cancellation Disclosure
until such time as a final rule implementing the TILA-RESPA integrated
disclosures takes effect achieves the purpose of TILA to promote the
informed use of credit through a more effective, consolidated
disclosure, and facilitates compliance by reducing regulatory burden
associated with revising systems and practices multiple times and
providing multiple disclosures to consumers.
The Bureau is also exercising exemption authority pursuant to TILA
section 105(f). The Bureau has considered the factors in TILA section
105(f) and believes that an exemption is appropriate under that
provision. Specifically, the Bureau believes that the exemption is
appropriate for all affected borrowers, regardless of their other
financial arrangements and financial sophistication and the importance
of the loan to them. Similarly, the Bureau believes that the exemption
is appropriate for all affected loans, regardless of the amount of the
loan and whether the loan is secured by the principal residence of the
consumer. Furthermore, the Bureau believes that, on balance, the
exemption will simplify the credit process without undermining the goal
of consumer protection or denying important benefits to consumers.
As discussed above, the Bureau believes that the exemption overall
provides a benefit to consumers by facilitating a more effective,
consolidated disclosure scheme. Absent an exemption, the Affected Title
XIV Disclosures and the Post-Consummation Escrow Cancellation
Disclosure would complicate and hinder the mortgage lending process
because consumers would receive inconsistent disclosures and, likely,
numerous additional pages of Federal disclosures that do not work
together in a meaningful, synchronized way. The Bureau also believes
that the credit process could be more expensive and complicated if the
Affected Title XIV Disclosures and the Post-Consummation Escrow
Cancellation Disclosure take effect independent of the larger TILA-
RESPA integration rulemaking because industry would be required to
revise systems and practices multiple times. The Bureau has also
considered the status of mortgage borrowers in issuing the exemptions,
and believes the exemption is appropriate to improve the informed use
of credit. The Bureau does not believe that the goal of consumer
protection would be undermined by the exemption, because of the risk
that layering the Affected Title XIV Disclosures and the Post-
Consummation Escrow Cancellation Disclosure on top of existing mandated
disclosures would lead to consumer confusion. The exemption allows the
Bureau to coordinate the changes in a way that improves overall
consumer understanding of the disclosures.
RESPA section 19(a) provides the Bureau with authority to grant
reasonable exemptions for classes of transactions from the requirements
of RESPA as necessary to achieve the purposes of RESPA. 12 U.S.C.
2617(a). As discussed above, one purpose of RESPA is to achieve more
effective advance disclosure to home buyers and sellers of settlement
costs. RESPA section 2(b)(1); 12 U.S.C. 2601(b). Delaying the optional
disclosure of the appraisal management company fee and the fee paid to
the appraiser provided for by Dodd-Frank Act section 1475 (amending
RESPA section 4(c)) until such time as a final rule implementing the
TILA-RESPA integrated disclosures takes effect will result in a more
effective disclosure and improve consumer understanding, as discussed
above.
Section 1405(b) of the Dodd-Frank Act additionally gives the Bureau
authority to exempt from or modify disclosure requirements, in whole or
in part, for any class of residential mortgage loans if the Bureau
determines that the exemption or modification is in the interest of
consumers and the public. 15 U.S.C. 1601 note. As discussed above,
implementing the Affected Title XIV Disclosures and the Post-
Consummation Escrow Cancellation Disclosure with the TILA-RESPA
integrated disclosures is in the interest of consumers because it
allows the Bureau to coordinate the changes mandated by the Dodd-Frank
Act in a way that synchronizes and harmonizes the disclosures, which in
turn will improve overall consumer understanding of the disclosures.
Further, implementing the Affected Title XIV Disclosures and the Post-
Consummation Escrow Cancellation Disclosure as part of the integrated
disclosure rulemaking is in the public interest because it produces a
more efficient regulatory scheme by incorporating multiple, potentially
confusing disclosures into clear and understandable forms through
consumer testing.
Consistent with section 1032(a) of the Dodd-Frank Act,\18\
implementing the Affected Title XIV Disclosures and the Post-
Consummation Escrow Cancellation Disclosure together with
[[Page 70111]]
the TILA-RESPA integrated disclosures would ensure that the features of
consumer credit transactions secured by real property are fully,
accurately, and effectively disclosed to consumers in a manner that
permits consumers to understand the costs, benefits, and risks
associated with the product or service, in light of the facts and
circumstances. 12 U.S.C. 5532(a). The Bureau believes that implementing
a single, consolidated disclosure will benefit consumers and facilitate
compliance with TILA and RESPA.
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\18\ As the Bureau stated in the TILA-RESPA Integration
Proposal, Dodd-Frank Act section 1032(c) provides that, in
prescribing rules pursuant to section 1032, the Bureau ``shall
consider available evidence about consumer awareness, understanding
of, and responses to disclosures or communications about the risks,
costs, and benefits of consumer financial products or services.'' 12
U.S.C. 5532(c). Consistent with Dodd-Frank Act section 1032(a), in
developing this final rule to delay implementation of the Affected
Title XIV Disclosures and the Post-Consummation Escrow Cancellation
Disclosure, the Bureau considered available studies, reports, and
other evidence about consumer awareness, understanding of, and
responses to disclosures or communications about the risks, costs,
and benefits of consumer financial products or services, including
the evidence developed through its consumer testing of the TILA-
RESPA integrated disclosures as well as prior testing done by the
Board and HUD regarding TILA and RESPA disclosures. See parts II and
III of the TILA-RESPA Integration Proposal. For the reasons
discussed in this final rule, the Bureau has considered available
evidence pursuant to Dodd-Frank Act section 1032(c).
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For these reasons, the Bureau is issuing this final rule to delay
the Affected Title XIV Disclosures and the Post-Consummation Escrow
Cancellation Disclosure until the Bureau issues a final rule
implementing the TILA-RESPA integrated disclosures required by sections
1032(f), 1098, and 1100A of the Dodd-Frank Act and such rule takes
effect. The Bureau considers the adoption of these amendments to Sec.
1026.1(c) as prescribing the rules in final form for the Affected Title
XIV Disclosures and the Post-Consummation Escrow Cancellation
Disclosure pursuant to Dodd-Frank Act section 1400(c)(1)(A), to the
extent regulations are required to be prescribed, and the effective
date of the final rule as satisfying Dodd-Frank Act section
1400(c)(1)(B). The Bureau views this final rule as issuing regulations
for purposes of Dodd-Frank Act section 1400(c)(3); therefore, the
Affected Title XIV Disclosures and Post-Consummation Escrow
Cancellation Disclosure do not take effect by operation of law with
respect to any transaction covered by TILA or RESPA on January 21,
2013.
This final rule will be effective on the date of publication in the
Federal Register. Under section 553(d) of the Administrative Procedure
Act (APA), the required publication or service of a substantive rule
shall be made not less than 30 days before its effective date, except
for (1) a substantive rule which grants or recognizes an exemption or
relieves a restriction; (2) interpretative rules and statements of
policy; or (3) as otherwise provided by the agency for good cause found
and published with the rule. 5 U.S.C. 553(d). As discussed in part III
above and part V below, this final rule provides for a temporary
exemption from the Affected Title XIV Disclosures and the Post-
Consummation Escrow Cancellation Disclosure such that they would not
become self-effective on January 21, 2013, and instead would be
required at the time the TILA-RESPA integrated disclosures become
effective. Therefore, under section 553(d)(1) of the APA, the Bureau is
publishing this final rule less than 30 days before its effective date
because it is a substantive rule which grants or recognizes an
exemption or relieves a restriction. 5 U.S.C. 553(d)(1).
V. Section-by-Section Analysis of Final Rule
In the TILA-RESPA Integration Proposal, the Bureau proposed to
exempt persons temporarily from the disclosure requirements of the
Affected Title XIV Disclosures (i.e., sections 128(a)(16) through (19),
128(b)(4), 129C(f)(1), 129C(g)(2) and (3), 129C(h), 129D(h), and
129D(j)(1)(A) of TILA and section 4(c) of RESPA), until regulations
implementing the integrated disclosures required by sections 1032(f),
1098, and 1100A of the Dodd-Frank Act take effect. 15 U.S.C.
1638(a)(16)-(19), 1638(b)(4), 1639c(f)(1), 1639c(g), 1639c(h),
1639d(h), and 1639d(j)(1)(A); 12 U.S.C. 2604(c); 12 U.S.C. 5532(f); 12
U.S.C. 2603; 15 U.S.C. 1604. The TILA-RESPA Integration Proposal
provided for implementation of the exemption in proposed Sec.
1026.1(c)(5) by stating that no person is required to provide the
disclosures required by the statutory provisions listed above. Proposed
comment 1(c)(5)-1 explained that Sec. 1026.1(c)(5) implements the
above-listed provisions of TILA and RESPA added by the Dodd-Frank Act
by exempting persons from the disclosure requirements of those
sections. The comment proposed to clarify that the exemptions provided
in proposed Sec. 1026.1(c)(5) are intended to be temporary and will
apply only until compliance with the regulations implementing the
integrated disclosures required by section 1032(f) of the Dodd-Frank
Act become mandatory. Proposed comment 1(c)(5)-1 also clarified that
the exemption in proposed Sec. 1026.1(c)(5) does not exempt any person
from any other requirement of Regulation Z, Regulation X, or of TILA or
RESPA.
The Bureau has considered the comments addressing the proposed
amendments to Sec. 1026.1(c), which are summarized in part II.C,
above. Based on those comments and its own analysis, the Bureau has
determined that it will adopt the proposed amendments to Sec.
1026.1(c), with only one substantive change and the technical changes
described below.
1. Post-Consummation Escrow Cancellation Disclosure
Although the Post-Consummation Escrow Cancellation Disclosure was
not included in the Affected Title XIV Disclosures in the TILA-RESPA
Integration Proposal, the Bureau nevertheless received comment
requesting that it delay implementation of this disclosure, as
described above. Furthermore, as discussed above, the Board received
similar requests from commenters on its 2011 Escrows Proposal, which is
now the Bureau's responsibility.
The Bureau has considered the comments received by the Board and
the Bureau and believes that, for the reasons given by the commenters
and the reasons described in part II above, delaying implementation of
the Post-Consummation Escrow Cancellation Disclosure and coordinating
such implementation with that of the TILA-RESPA integrated disclosures
is in the interest of industry and consumers alike. As discussed in
part II above, the Dodd-Frank Act statutory requirements for the
content of the Pre-Consummation Escrow Waiver Disclosure and the Post-
Consummation Escrow Cancellation Disclosure are the same, and the model
forms proposed in the Board's 2011 Escrows Proposal contained similar
language for both disclosures. The Bureau tested language for the Pre-
Consummation Escrow Waiver Disclosure at its consumer testing conducted
in connection with the TILA-RESPA Integration Proposal and proposed to
integrate this disclosure into the Closing Disclosure (which integrates
the final TILA disclosure and the RESPA settlement statement).\19\
Implementing the Post-Consummation Escrow Cancellation Disclosure along
with the TILA-RESPA integrated disclosures will allow the Bureau to use
feedback it has received from consumer testing conducted prior to the
TILA-RESPA Integration Proposal, the comments on that proposal, and any
consumer testing conducted subsequent to the proposal to harmonize the
content and format of the Post-Consummation Escrow Cancellation
Disclosure, the Pre-Consummation Escrow Waiver Disclosure, and the
TILA-RESPA integrated disclosures. Consumers, therefore, would benefit
from a more fully integrated and synchronized overall mortgage
disclosure scheme, and industry would benefit from a more coordinated
implementation of the overall mortgage disclosure scheme mandated by
the Dodd-Frank Act and implemented by the Bureau. The Bureau also notes
that no commenters supported the finalization of the Post-Consummation
Escrow Cancellation
[[Page 70112]]
Disclosure with the planned finalization of the Board's 2011 Escrows
Proposal on or before January 21, 2013, and no commenters supported
allowing the Post-Consummation Escrow Cancellation Disclosure to take
effect by operation of law on that date.
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\19\ For a report on the Bureau's consumer testing, see Kleimann
Communication Group, Inc., Know Before You Owe: Evolution of the
Integrated TILA-RESPA Disclosures (July 2012), available at https://files.consumerfinance.gov/f/201207_cfpb_report_tila-respa-testing.pdf.
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In light of the considerations discussed above, including the
comments submitted to the Board and the Bureau in support of a
temporary exemption from compliance, the Bureau is modifying the
proposed amendments to Sec. 1026.1(c) to exempt persons from
compliance with the Post-Consummation Escrow Cancellation Disclosure in
addition to the Affected Title XIV Disclosures. Accordingly, the Bureau
is adding a reference in Sec. 1026.1(c)(5) and associated commentary
to TILA section 129D(j)(1)(B).
2. Technical Changes
In addition, in the final rule the Bureau is making three technical
changes to Sec. 1026.1 and its commentary. First, in Sec. 1026.1(a),
reference has been added to reflect the implementation of certain
provisions of RESPA. This technical change relates to the fact that the
optional disclosure of appraisal management company fees and fees paid
to appraisers under RESPA section 4(c) (as added by Dodd-Frank Act
section 1475) is being implemented in Regulation Z, rather than
Regulation X, by exempting persons from the disclosure requirements of
that section.
Second, in comment 1(c)(5)-1, references have been added to Dodd-
Frank Act sections 1098 and 1100A, which amend RESPA section 4(a) and
TILA section 105(b), respectively, in addition to the proposed
comment's reference to Dodd-Frank Act section 1032(f). This technical
change reflects the fact that sections 1098 and 1100A of the Dodd-Frank
Act also mandate the TILA-RESPA integrated disclosures. Third, the
Bureau has amended Sec. 1026.1(a) to make clear that the Office of
Management and Budget control number listed applies only to Bureau
respondents.
VI. Section 1022(b)(2) Analysis
Section VII of the TILA-RESPA Integration Proposal contained the
Bureau's preliminary analysis under section 1022(b)(2)(A) of the Dodd-
Frank Act of the potential benefits and costs of the proposed rule to
consumers and covered persons (as defined in Dodd-Frank Act section
1002(6), 12 U.S.C. 5481(6)), including the potential reduction of
access by consumers to consumer financial products or services; the
impact on depository institutions and credit unions with $10 billion or
less in total assets as described in section 1026 of the Dodd-Frank
Act; and the impact on consumers in rural areas (the Preliminary
Section 1022(b)(2) Analysis).\20\ In the Preliminary Section 1022(b)(2)
Analysis, the Bureau addressed the impact of the proposed delay of the
Affected Title XIV Disclosures on covered persons and consumers. See
section VII.D.8 of the TILA-RESPA Integration Proposal. There, the
Bureau noted that the proposed rule would exempt creditors temporarily
from compliance with certain new disclosure requirements added to TILA
and RESPA by the Dodd-Frank Act until such final rule takes effect.
Although the Dodd-Frank Act does not specifically require inclusion of
the Affected Title XIV Disclosures in the TILA-RESPA integrated
disclosures, the Bureau stated in the TILA-RESPA Integration Proposal
that it believes these disclosures should be included in the integrated
disclosures because doing so would improve the overall effectiveness of
the integrated disclosures, which may benefit consumers and covered
persons, and also reduce burden on covered persons. See 77 FR 51116,
51279. The Bureau further stated that making the requirements to
provide the Affected Title XIV Disclosures become effective
simultaneously with the TILA-RESPA integrated disclosures would avoid
unnecessary regulatory burden by preventing creditors from having to
implement multiple iterations of disclosure rules. Lastly, the Bureau
stated that it did not anticipate additional costs to covered persons
as a result of delayed implementation of the Affected Title XIV
Disclosures, although covered persons may incur additional recurring
costs associated with calculating and disclosing this additional
information to consumers once the implementing rules take effect. See
77 FR 51116, 51279-80. As discussed above, this final rule effectively
delays implementation of certain disclosure requirements and thus,
consumers will not receive the information provided in such disclosures
as early as they would have if the statutory requirements had become
self-effective pursuant to Dodd-Frank Act section 1400(c). However, the
Bureau believes that these disclosures are of lesser value to consumers
without the comprehensive reform of the integrated TILA-RESPA
disclosures. In addition, any benefits that consumers would derive from
allowing the statutory requirements to take effect prior to the TILA-
RESPA integrated disclosures would only accrue during the time between
when the requirements would take effect and when the TILA-RESPA
integrated disclosure requirements would be finalized.
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\20\ See 77 FR 51116, 51267. The Bureau stated that in
developing the proposed rule, the Bureau had considered potential
benefits, costs, and impacts, and had consulted or offered to
consult with the prudential regulators, the Department of Housing
and Urban Development, and the Federal Trade Commission, including
regarding consistency with any prudential, market, or systemic
objectives administered by such agencies. The Bureau also held
discussions with or solicited feedback from the United States
Department of Agriculture Rural Housing Service, the Farm Credit
Administration, the Federal Housing Administration, the Federal
Housing Finance Agency, and the Department of Veterans Affairs
regarding the potential impacts of the proposed rule on those
entities' loan programs. Id. In addition, prior to finalizing the
rule, the Bureau consulted or offered to consult with the
appropriate prudential regulators and Federal agencies regarding
this final rule.
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The baseline for analysis in this final Dodd-Frank Act section
1022(b)(2) analysis is a post-statutory baseline analysis. The
Preliminary Section 1022(b)(2) Analysis used a pre-statutory baseline,
i.e., it analyzed the benefits, costs, and impacts of the proposed
temporary exemption against a pre-statutory baseline. The Bureau
believes a post-statutory baseline more fully informs the rulemaking
and is more appropriate for the distinct nature of this final rule--to
prevent effectively certain statutory disclosure requirements from
becoming self-effective. The Bureau has discretion in future
rulemakings to choose the most appropriate baseline for each particular
rulemaking.
The Bureau did not receive any comments on the Bureau's Preliminary
Section 1022(b)(2) Analysis regarding the effect of the proposed delay
of implementing the Affected Title XIV Disclosures on covered persons
and consumers. The Bureau also believes that delaying implementation of
the Post-Consummation Escrow Cancellation Disclosure and, instead,
implementing the disclosure along with the TILA-RESPA integrated
disclosures would avoid unnecessary regulatory burden by preventing
covered persons from having to implement multiple iterations of
disclosure rules. The Bureau does not anticipate additional costs to
covered persons as a result of such delayed implementation of the Post-
Consummation Escrow Cancellation Disclosure, although covered persons
may incur additional recurring costs associated with calculating and
disclosing this additional information to consumers once the
implementing rules take effect.
In light of this, the Bureau concludes, using a post-statutory
baseline, that the
[[Page 70113]]
final rule will have the benefits, costs, and impacts on covered
persons and consumers that were discussed in the Preliminary Section
1022(b)(2) Analysis. This final rule does not have the potential to
reduce access by consumers to consumer financial products or services,
as it will not increase costs on covered persons. In addition, as noted
above, because this rule effectively delays the implementation of
disclosure requirements, it will cause no additional costs on
depository institutions and credit unions with $10 billion or less in
total assets, as described in section 1026 of the Dodd-Frank Act.
Further, it will have no significant or adverse impact on consumers in
rural areas, as it does not increase costs for covered persons or
consumers. The Bureau believes that delaying the implementation of the
Affected Title XIV Disclosures and the Post-Consummation Escrow
Cancellation Disclosure will eliminate the costs that covered persons
would have incurred if they had to implement the disclosure provisions
multiple times, i.e., if these statutory provisions had taken effect by
operation of law pursuant to Dodd-Frank Act section 1400(c)(3) and were
also later implemented through the TILA-RESPA integration final rule
(including potential increased compliance costs due to uncertainty of
complying with statutory provisions without implementing regulations).
VII. Regulatory Flexibility Act
The Bureau's TILA-RESPA Integration Proposal included an initial
regulatory flexibility analysis (IRFA) discussing the potential impact
of the Bureau's regulations on small entities, including small
businesses, under the Regulatory Flexibility Act (RFA). See 77 FR
51116, 51282. Among other issues, the IRFA discussed how the proposed
rule would exempt creditors temporarily from compliance with certain
new disclosure requirements added to TILA and RESPA by the Dodd-Frank
Act until the integrated TILA-RESPA rule takes effect. See 77 FR 51116,
51293. The Bureau stated in the IRFA that, although the Dodd-Frank Act
does not specifically require inclusion of all of these new disclosures
in the integrated disclosures, the Bureau believes these disclosures
should be included in the integrated disclosures because doing so would
improve the overall effectiveness of the integrated disclosures, which
may benefit consumers and covered persons that are small entities, and
also reduce burden on covered persons that are small entities. The
Bureau provided in the IRFA that finalizing the rules implementing
these title XIV disclosures simultaneously with the final TILA-RESPA
rule would avoid unnecessary regulatory burden by preventing creditors
that are small entities from having to implement multiple iterations of
disclosure rules. The Bureau stated in the IRFA that it does not
anticipate additional costs to covered persons as a result of delayed
implementation of the new disclosure requirements, although small
entities may incur additional recurring costs associated with
calculating and disclosing this additional information to consumers
once the implementing rules take effect. Id. The Bureau also noted in
the IRFA that incorporating the Affected Title XIV Disclosures into the
TILA-RESPA integrated disclosures was being proposed to avoid
duplication, overlaps, and conflicts. See 77 FR 51116, 51294.
The Bureau did not receive any comments on the conclusions that the
Bureau made in the IRFA regarding the effect on small entities of the
proposed delay of implementing the Affected Title XIV Disclosures. The
Bureau also believes that delaying implementation of the Post-
Consummation Escrow Cancellation Disclosure to implement it
simultaneously with the TILA-RESPA integration final rulemaking will
avoid unnecessary regulatory burden by preventing covered persons that
are small entities from having to implement multiple iterations of
disclosure rules. The Bureau does not anticipate additional costs as a
result of delayed implementation of the Post-Consummation Escrow
Cancellation Disclosure, although small entities may incur additional
recurring costs associated with calculating and disclosing this
additional information to consumers once the implementing rules take
effect. Id. The Bureau also believes that synchronizing the format and
content of the Post-Consummation Escrow Cancellation Disclosure with
the Pre-Consummation Escrow Waiver Disclosure and the integrated TILA-
RESPA disclosures avoids duplication, overlaps, and conflicts with
other Federal rules. See 77 FR 51116, 51294.
Accordingly, because this final rule, which the Bureau is issuing
separately from the other parts of the TILA-RESPA Integration Proposal,
will not create additional costs for covered persons that are small
entities, the undersigned certifies that it will not have a significant
economic impact on a substantial number of small entities. Therefore,
an analysis under the RFA is not required for this final rule. However,
the factors required in such an analysis are addressed below for
informational purposes.
The Bureau has concluded that the final rule will impose, subject
to a post-statutory baseline, the impacts on small entities that were
discussed in the IRFA. The delay of the implementation of the Affected
Title XIV Disclosures and the Post-Consummation Escrow Cancellation
Disclosure, so that they may be implemented with the integrated TILA-
RESPA disclosures, will improve the integrated disclosures, which may
benefit consumers and small entities, and avoid unnecessary regulatory
burden by preventing covered persons that are small entities from
having to implement multiple iterations of disclosure rules.
As described in the TILA-RESPA Integration Proposal, the Bureau
estimates the final rule to affect small entities that are engaged in
closed-end mortgage transactions that are commercial banks and savings
associations, credit unions, non-bank mortgage lenders, mortgage
brokers, and settlement agents, totaling about 26,000 small
entities.\21\ This rule provides an exemption and, therefore, does not
contain any reporting, recordkeeping, or other requirements. The Bureau
has reviewed possible steps to minimize the impact on small entities in
connection with the TILA-RESPA Integration Proposal. As the nature of
this final rule is an exemption, it is itself a step taken to minimize
impact on small entities (as opposed to the alternative of letting the
statutory disclosure provisions become self-effective). The final rule
covers all small entities subject to the statutory provisions, because
the final rule applies to persons generally.
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\21\ See 77 FR 51116, 51285-6.
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In sum, this final rule will eliminate the costs that covered small
entities would have incurred if they had to implement the disclosure
provisions multiple times, i.e., if these statutory provisions had
taken effect by operation of law pursuant to Dodd-Frank Act section
1400(c)(3) and were also later implemented through the TILA-RESPA
integration final rule (including potential increased compliance costs
due to uncertainty of complying with statutory provisions without
implementing regulations).
VIII. Paperwork Reduction Act
The Bureau has determined that this final rule does not impose any
new recordkeeping, reporting, or disclosure requirements on covered
persons or members of the public that would be collections of
information requiring OMB approval under the Paperwork Reduction Act
(PRA), 44 U.S.C. 3501, et seq. Rather, the final rule defers certain
[[Page 70114]]
information collection requirements subject to the PRA until such time
as the TILA-RESPA integrated disclosure final rule, and the
corresponding information collection requirements, becomes effective.
The Bureau did not receive any comments related to this exemption under
the PRA.
List of Subjects in 12 CFR Part 1026
Advertising, Consumer protection, Credit, Credit unions, Mortgages,
National banks, Recordkeeping requirements, Reporting, Savings
associations, Truth in lending.
Authority and Issuance
For the reasons stated in the preamble, the Bureau amends
Regulation Z, 12 CFR part 1026, as set forth below:
PART 1026--TRUTH IN LENDING (REGULATION Z)
0
1. The authority citation for part 1026 is revised to read as follows:
Authority: 12 U.S.C. 2601; 2603-2605, 2607, 2609, 2617, 5511,
5512, 5532, 5581; 15 U.S.C. 1601 et seq.
0
2. Section 1026.1 is amended by revising paragraph (a) and adding
paragraph (c)(5) to read as follows:
Sec. 1026.1 Authority, purpose, coverage, organization, enforcement,
and liability.
(a) Authority. This part, known as Regulation Z, is issued by the
Bureau of Consumer Financial Protection to implement the Federal Truth
in Lending Act, which is contained in title I of the Consumer Credit
Protection Act, as amended (15 U.S.C. 1601 et seq.). This part also
implements title XII, section 1204 of the Competitive Equality Banking
Act of 1987 (Pub. L. 100-86, 101 Stat. 552). Furthermore, this part
implements certain provisions of the Real Estate Settlement Procedures
Act of 1974, as amended (12 U.S.C. 2601 et seq.). The Bureau's
information-collection requirements contained in this part have been
approved by the Office of Management and Budget under the provisions of
44 U.S.C. 3501 et seq. and have been assigned OMB No. 3170-0015 (Truth
in Lending).
* * * * *
(c) * * *
(5) No person is required to provide the disclosures required by
sections 128(a)(16) through (19), 128(b)(4), 129C(f)(1), 129C(g)(2) and
(3), 129C(h), 129D(h), 129D(j)(1)(A), or 129D(j)(1)(B) of the Truth in
Lending Act or section 4(c) of the Real Estate Settlement Procedures
Act.
* * * * *
0
3. In Supplement I to Part 1026:
A. Under Section 1026.1--Authority, Purpose, Coverage,
Organization, Enforcement and Liability, under subheading 1(c)
Coverage, add in alphanumerical order the subheading Paragraph 1(c)(5)
and paragraph 1. under that subheading.
The additions read as follows:
Supplement I to Part 1026--Official Interpretations
* * * * *
Subpart A--General
Section 1026.1--Authority, Purpose, Coverage, Organization, Enforcement
and Liability 1(c) Coverage
* * * * *
Paragraph 1(c)(5).
1. Temporary exemption. Section 1026.1(c)(5) implements sections
128(a)(16) through (19), 128(b)(4), 129C(f)(1), 129C(g)(2) and (3),
129C(h), 129D(h), 129D(j)(1)(A), and 129D(j)(1)(B) of the Truth in
Lending Act and section 4(c) of the Real Estate Settlement Procedures
Act, by exempting persons from the disclosure requirements of those
sections. These exemptions are intended to be temporary, lasting only
until regulations implementing the integrated disclosures required by
sections 1032(f), 1098, and 1100A of the Dodd-Frank Act (12 U.S.C.
5532(f), 12 U.S.C. 2603(a), 15 U.S.C. 1604(b)) become mandatory.
Section 1026.1(c)(5) does not exempt any person from any other
requirement of this part, Regulation X (12 CFR part 1024), the Truth in
Lending Act, or the Real Estate Settlement Procedures Act.
* * * * *
Dated: November 13, 2012.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2012-28341 Filed 11-21-12; 8:45 am]
BILLING CODE 4810-AM-P
