Loan Originator Compensation Requirements Under the Truth in Lending Act (Regulation Z); Prohibition on Financing Credit Insurance Premiums; Delay of Effective Date, 32547-32551 [2013-13023]
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Federal Register / Vol. 78, No. 105 / Friday, May 31, 2013 / Rules and Regulations
■ 54. Revise §§ 792.51(a) through (d) to
read as follows:
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§ 792.51
Procedures.
(a) Mandatory review. All
declassification requests made by a
member of the public, by a government
employee or by an agency shall be
handled by the Executive Director or the
Executive Director’s designee. Under no
circumstances shall the Executive
Director refuse to confirm the existence
or nonexistence of a document under
the Freedom of Information Act or the
mandatory review provisions of other
applicable law, unless the fact of its
existence or nonexistence would itself
be classifiable under applicable law.
Although NCUA has no authority to
classify or declassify information, it
occasionally handles information
classified by another agency. The
Executive Director shall refer all
declassification requests to the agency
that originally classified the
information. The Executive Director or
the Executive Director’s designee shall
notify the requesting person or agency
that the request has been referred to the
originating agency and that all further
inquiries and appeals must be made
directly to the other agency.
(b) Handling and safeguarding
national security information. All
information classified ‘‘Top Secret,’’
‘‘Secret,’’ and ‘‘Confidential’’ shall be
delivered to the Executive Director or
the Executive Director’s designee
immediately upon receipt. The
Executive Director shall advise those
who may come into possession of such
information of the name of the current
designee. If the Executive Director is
unavailable, the designee shall lock the
documents, unopened, in the
combination safe located in the secure
facility of the Office of the Executive
Director. If the Executive Director or the
Executive Director’s designee is
unavailable to receive such documents,
the documents shall be delivered in
accordance with NCUA’s mail handling
procedures for classified information.
Under no circumstances shall classified
materials that cannot be delivered to the
Executive Director or the Executive
Director’s designee be stored in a
location other than in the safe
designated by the Executive Director for
information classified ‘‘Top Secret,’’
‘‘Secret,’’ and ‘‘Confidential.’’
(c) Storage. All classified documents
shall be stored in the safe designated by
the Executive Director for information
classified ‘‘Top Secret,’’ ‘‘Secret,’’ and
‘‘Confidential.’’ The combination shall
be known only to the Executive Director
and the Executive Director’s designee
holding the proper security clearance.
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(d) Employee education. (1) The
Executive Director shall send a memo to
every NCUA employee who:
(i) Has a security clearance; and
(ii) May handle classified materials.
(2) This memo shall describe NCUA
procedures for handling, reproducing
and storing classified documents. The
Executive Director shall require each
such employee to review applicable
Executive Orders on the classification of
national security information.
*
*
*
*
*
[FR Doc. 2013–12640 Filed 5–30–13; 8:45 am]
BILLING CODE 7535–01–P
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1026
[Docket No. CFPB–2013–0013]
RIN 3170–AA37
Loan Originator Compensation
Requirements Under the Truth in
Lending Act (Regulation Z); Prohibition
on Financing Credit Insurance
Premiums; Delay of Effective Date
Bureau of Consumer Financial
Protection.
ACTION: Final rule; Delay of Effective
Date.
AGENCY:
SUMMARY: The Bureau of Consumer
Financial Protection (Bureau) is issuing
a final rule delaying the June 1, 2013,
effective date of a prohibition on
creditors financing credit insurance
premiums in connection with certain
consumer credit transactions secured by
a dwelling. The prohibition was
adopted in the Loan Originator
Compensation Requirements under the
Truth in Lending Act (Regulation Z)
Final Rule, issued on January 20, 2013,
and published in the Federal Register
on February 15, 2013. The Bureau is
delaying the effective date until January
10, 2014, to permit the Bureau to clarify,
before the provision takes effect, its
applicability to transactions other than
those in which a lump-sum premium is
added to the loan amount at closing.
The new effective date will be January
10, 2014, but the Bureau will solicit
comment on the appropriate effective
date at the same time that it seeks
comment on clarifications. (The Bureau
is not contemplating extending the
effective date beyond January 10, 2014.)
DATES: The final rule published
February 15, 2013, at 78 FR 11280, is
effective January 10, 2014, with the
exception of the amendments to 12 CFR
1026.36(h) and (i), which are effective
June 1, 2013. This rule delays the
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effective date of the amendment to 12
CFR 1026.36(i) until January 10, 2014.
FOR FURTHER INFORMATION CONTACT:
Richard Arculin or Daniel Brown,
Counsels, Office of Regulations, at (202)
435–7700.
SUPPLEMENTARY INFORMATION:
I. Background
In January 2013, the Bureau issued
several final rules concerning mortgage
markets in the United States, pursuant
to the Dodd-Frank Wall Street Reform
and Consumer Protection Act (DoddFrank Act).1 One of these final rules was
the Loan Originator Compensation
Requirements Under the Truth in
Lending Act (Regulation Z) (Final
Rule).2 The Final Rule implemented
Dodd-Frank Act amendments to the
Truth in Lending Act (TILA) addressing
loan originator compensation;
qualifications of, and registration or
licensing of loan originators;
compliance procedures for depository
institutions; mandatory arbitration; and
the financing of single-premium credit
insurance. With regard to the financing
of single-premium credit insurance, the
Final Rule included a provision
implementing the Dodd-Frank Act
section 1414 amendment that added
new TILA section 129C(d), 15 U.S.C.
1639c(d). That provision prohibits
creditors from financing premiums or
fees for certain credit insurance
products in connection with certain
consumer credit transactions secured by
a dwelling. The Bureau implemented
this provision by adopting § 1026.36(i).
A. Title XIV Rulemaking Effective Dates
In enacting the Dodd-Frank Act,
Congress significantly amended the
statutory requirements governing a
number of mortgage practices, including
loan originator compensation. Under the
statute, most of these new requirements
would have taken effect automatically
on January 21, 2013, if the Bureau had
not issued implementing regulations by
that date.3 To avoid uncertainty and
potential disruption in the national
mortgage market at a time of economic
vulnerability, the Bureau issued several
final rules (Title XIV Rulemakings) in
January 2013, including the Final Rule
issued on January 20, 2013, to
implement these new statutory
provisions and provide for an orderly
transition. To allow the mortgage
industry sufficient time to comply with
the new rules, the Bureau established
January 10, 2014—one year after
1 Public
Law 111–203, 124 Stat. 1376 (2010).
FR 11279 (Feb. 15, 2013).
3 Dodd-Frank Act section 1400(c), 15 U.S.C. 1601
note.
2 78
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issuance of the earliest of the Title XIV
Rulemakings—as the effective date for
most of the Title XIV Rulemakings,
including most provisions of the Final
Rule. However, the Bureau identified
certain provisions that it believed did
not present significant implementation
burdens for industry, including
§ 1026.36(h) on mandatory arbitration
clauses and waivers of certain consumer
rights and § 1026.36(i) on financing
single-premium credit insurance, as
adopted by the Final Rule. For these
provisions, the Bureau set an earlier
effective date of June 1, 2013.
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B. Implementation Initiative for New
Mortgage Rules
On February 13, 2013, the Bureau
announced an initiative to support
implementation of its new mortgage
rules (Implementation Plan),4 under
which the Bureau would work with the
mortgage industry to ensure that the
Title XIV Rulemakings can be
implemented accurately and
expeditiously. The Implementation Plan
included (1) coordination with other
agencies; (2) publication of plainlanguage guides to the new rules; (3)
publication of updates, such as
additional corrections, adjustments, and
clarifications of the new rules, as
needed; (4) publication of readiness
guides for the new rules; and (5)
education of consumers on the new
rules.
This final rule, which delays the
effective date of the provision on
financing single-premium credit
insurance, is one of several updates to
the Title XIV Rulemakings. The purpose
of these updates is to address important
questions raised by industry, consumer
groups, or other agencies. The update
addressed by this final rule was given
priority because the effective date for
§ 1026.36(i) was June 1, 2013, and
certainty regarding compliance is a
matter of some urgency. The Bureau
intends to publish a proposal shortly to
seek further comment on clarifications
to the provision as discussed further
below.
II. Legal Authority
On July 21, 2011, section 1061 of the
Dodd-Frank Act transferred to the
Bureau the ‘‘consumer financial
protection functions’’ previously vested
in certain other Federal agencies,
including the Board of Governors of the
Federal Reserve System. The term
‘‘consumer financial protection
function’’ is defined to include ‘‘all
4 Consumer Financial Protection Bureau Lays Out
Implementation Plan for New Mortgage Rules. Press
Release. Feb. 13, 2013.
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authority to prescribe rules or issue
orders or guidelines pursuant to any
Federal consumer financial law,
including performing appropriate
functions to promulgate and review
such rules, orders, and guidelines.’’ 12
U.S.C. 5581(a)(1). TILA is a Federal
consumer financial law. Dodd-Frank
Act section 1002(14), 12 U.S.C. 5481(14)
(defining ‘‘Federal consumer financial
law’’ to include the ‘‘enumerated
consumer laws’’ and the provisions of
title X of the Dodd-Frank Act); DoddFrank Act section 1002(12), 12 U.S.C.
5481(12) (defining ‘‘enumerated
consumer laws’’ to include TILA).
Accordingly, the Bureau has authority
to issue regulations pursuant to TILA.
As amended by the Dodd-Frank Act,
TILA section 105(a), 15 U.S.C. 1604(a),
directs the Bureau to prescribe
regulations to carry out the purposes of
TILA and provides that such regulations
may contain additional requirements,
classifications, differentiations, or other
provisions, and may provide for such
adjustments and exceptions for all or
any class of transactions, that the
Bureau judges are necessary or proper to
effectuate the purposes of TILA, to
prevent circumvention or evasion
thereof, or to facilitate compliance.
Further, under Dodd-Frank Act section
1022(b)(1), 15 U.S.C. 5512(b)(1), the
Bureau has general authority to
prescribe rules as may be necessary or
appropriate to enable the Bureau to
administer and carry out the purposes
and objectives of the Federal consumer
financial laws, and to prevent evasions
thereof. The Bureau is delaying the
effective date until January 10, 2014,
pursuant to its TILA section 105(a) and
Dodd-Frank Act section 1022(b)(1)
authority. The Bureau believes such a
delay will facilitate compliance and
help ensure that the Final Rule does not
have adverse unintended consequences.
In particular, the delay will permit the
Bureau to clarify, before § 1026.36(i)
takes effect, its applicability to
transactions other than those in which
a lump-sum premium is added to the
loan amount at closing.
III. Effective Date
As discussed above, Dodd-Frank Act
section 1414 added TILA section
129C(d), which generally prohibits a
creditor from financing any premiums
or fees for credit insurance in
connection with any residential
mortgage loan or with any extension of
credit under an open-end consumer
credit plan secured by the consumer’s
principal dwelling.5 The prohibition
applies to credit life, credit disability,
credit unemployment, credit property
insurance, and other similar products.
The same provision states, however,
that the prohibition does not apply to
credit insurance for which premiums or
fees are calculated and paid in full on
a monthly basis or to credit
unemployment insurance for which the
premiums are reasonable, the creditor
receives no compensation, and the
premiums are paid pursuant to a
separate insurance contract and are not
paid to the creditor’s affiliate.
In a proposed rule published on
September 7, 2012,6 the Bureau
proposed to implement this provision
through § 1026.36(i), which generally
tracks the statutory language. In the
proposal, the Bureau stated its belief
that the provision was generally
straightforward but sought comment on
whether any issues raised by the
provision required clarification.
Anticipating that few, if any,
clarifications would be necessary and
that accordingly industry would not
require significant time to accommodate
any clarifications of the final rule, the
Bureau also sought comment on
whether the provision should become
effective sooner than January 2014.7
The Bureau received very few public
comments on the substance of the
proposed prohibition or the earlier
effective date. Consumer groups sought
clarification on the provision’s
applicability to certain factual scenarios
where credit insurance premiums are
charged periodically, rather than as a
lump-sum added to the loan amount at
closing. They also urged the Bureau to
provide an early effective date for the
provision. The Bureau did not receive
any public comments from the credit
insurance industry. The Bureau
received some limited comments from
creditors concerning the general
prohibition, but these comments did not
address the applicability of the
provision to transactions in which
premiums are charged periodically. In
the preamble to the Final Rule, the
Bureau provided some explanation
concerning the provision’s applicability
to credit insurance premiums charged
periodically, rather than as a lump-sum
added to the loan amount at closing.
A. Post-Final Rule Concerns
Since publication of the Final Rule,
industry stakeholders have expressed
concern that the regulation text and
preamble left substantial uncertainty
about whether, and under what
circumstances, premiums for certain
credit insurance products can be
6 77
5 15
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7 Id.
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charged on a periodic basis in
connection with a covered consumer
credit transaction secured by a dwelling.
Specifically, representatives of credit
unions and credit insurers have raised
a concern that the Final Rule could be
interpreted to prohibit any level or
levelized credit insurance premiums,
which they believe are not financed by
the creditor and/or should be
permissible as calculated and paid in
full on a monthly basis.8 These
stakeholders pointed out that the
preamble to the Final Rule states that
‘‘charging a fixed monthly charge for the
credit insurance that does not decline as
the loan balance declines would fail to
meet the requirement for the premium
to be ‘calculated . . . on a monthly
basis’ [and] . . . [a]s a result, this
practice would fail to satisfy the
conditions for the exclusion from what
constitutes ‘financ[ing], directly or
indirectly’ credit insurance premiums.’’
Thus, absent clarification by the Bureau,
the Final Rule could be interpreted to
assume that any level or levelized
premiums are both financed by the
creditor and not calculated and paid on
a monthly basis—and therefore they are
prohibited.
Credit insurance company
representatives raised several
interpretive questions relating to this
concern, which they have urged the
Bureau to address. They stated that
levelized premiums are, in fact,
‘‘calculated . . . on a monthly basis,’’
because an actuarially derived rate is
multiplied by a fixed monthly principal
and interest payment to derive the
monthly insurance premium. They also
stated that level premiums are
‘‘calculated . . . on a monthly basis’’
because an actuarially derived rate is
multiplied by the consumer’s original
loan amount to derive the monthly
insurance premium. Accordingly, they
believe that level and levelized credit
insurance premiums should be
excluded from the prohibition on
creditors financing credit insurance
premiums so long as they are also paid
in full on a monthly basis. In addition
they stated that, even if the Bureau
concludes that level or levelized credit
insurance premiums are not
‘‘calculated’’ on a monthly basis within
the meaning of the exclusion from the
prohibition, they are not ‘‘financed’’ by
a creditor and thus are not prohibited by
the statutory provision.
8 The term ‘‘levelized’’ premiums refers to a flat
monthly payment that is derived from a decreasing
monthly premium alternative arrangement, and the
term ‘‘level’’ premium refers to premiums for which
there is no decreasing monthly premium alternative
arrangement available, such as for level mortgage
life insurance.
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Accordingly, they have requested
clarification on § 1026.36(i)’s
applicability to these credit insurance
products and also have expressed
concern regarding their ability to
comply timely, given that the Final Rule
provided an effective date for
§ 1026.36(i) of June 1, 2013.
In light of the interpretive questions
that have arisen since publication of the
Final Rule, the Bureau intends to
publish a proposal to seek further
comment on the provision shortly. In
that proposal, the Bureau intends,
among other things to seek public
comment, including from industry
stakeholders and consumers, on (1) the
applicability of the prohibition to
transactions in which credit insurance
premiums are charged periodically; and
(2) given these proposed clarifications to
§ 1026.36(i), what effective date would
be appropriate.
B. May 10, 2013 Proposal To Delay
Effective Date
On May 10, 2013, the Bureau issued
a proposed rule seeking comment on a
temporary delay of the June 1, 2013
effective date of § 1026.36(i).9 The
Bureau made clear in the proposal that
it contemplated delaying the effective
date only as long as necessary for any
clarifications to be proposed, finalized,
and implemented, and sought public
comment on two issues: (1) whether the
effective date should be delayed; and (2)
if so, what the new effective date should
be. The Bureau also stated it was
concerned that, if the effective date were
not delayed, creditors could face
uncertainty about whether and under
what circumstances credit insurance
premiums may be charged periodically
in connection with covered consumer
credit transactions secured by a
dwelling, which could result in a
substantial compliance burden to
industry. Finally, the Bureau noted that
it intends to propose and again seek
comment on the effective date for any
clarifications to § 1026.36(i) as part of
the forthcoming proposal.
C. Public Comments
The Bureau received approximately
70 comments from credit unions and
other industry members supporting the
proposal to delay the effective date.
These commenters agreed that
interpretive questions exist regarding
the application of the provision to credit
insurance premiums charged
periodically, in particular to level or
levelized premiums. These commenters
strongly supported the proposal to delay
the effective date while those questions
9 78
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32549
are addressed in the upcoming proposal,
and they generally suggested a delay of
the effective date until January 10, 2014,
or alternatively 6 to 12 months after the
upcoming proposal is finalized. The
Bureau also received a joint comment
from consumer groups opposing the
proposal. The consumer groups stated
that they did not believe any real
interpretive questions exist that require
a delay of the effective date or an
additional proposal.
D. Final Rule
Upon consideration of these public
comments, the Bureau is finalizing the
proposal to delay the effective date for
§ 1026.36(i). The Bureau is persuaded
that significant interpretive questions
exist regarding the application of the
provision to credit insurance charged
periodically, which it intends to address
in a forthcoming proposal. The Bureau
also agrees with industry commenters
that, if the effective date were not
delayed, creditors would face
uncertainty about whether and under
what circumstances credit insurance
premiums may be charged periodically
in connection with covered consumer
credit transactions secured by a
dwelling, which could result in a
substantial compliance burden to
industry.
Rather than suspend the effective date
indefinitely pending the clarification,
the Bureau believes it is appropriate to
adopt a new effective date for
§ 1026.36(i) of January 10, 2014, which
is consistent with the effective date for
most of the Title XIV Rulemakings.
Thus, § 1026.36(i) will be effective for
any transactions where applications
were received by the creditor on or after
January 10, 2014.
However, with respect to the January
10, 2014 effective date, the Bureau
emphasizes that it intends to issue a
new proposal shortly that will, among
other things, specifically seek comment
on the appropriate effective date in light
of the proposal to provide additional
clarifying amendments. The Bureau is
mindful of the public comments it
received in connection with this notice
that suggest creditors will need time to
adjust certain credit insurance premium
billing practices once the clarifications
are finalized. However, any such
amendments will not be finalized until
the Bureau has proposed amendments
to § 1026.36(i), appropriately considered
public comment, and issued a final rule
in connection with the upcoming
proposal. The Bureau is also mindful of
the fact that the protections provided by
Congress would have applied effective
January 21, 2013, had the Bureau not
promulgated implementing regulations.
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The Bureau expects that industry will
use the intervening time to review
systems and begin making appropriate
modifications to facilitate the
implementation process as quickly as
practicable once the additional
clarifications are finalized.
Accordingly, the Bureau is delaying
the June 1, 2013 effective date for the
provision to January 10, 2014, while the
Bureau considers addressing
interpretive questions concerning the
provision’s applicability to transactions
other than those in which a lump-sum
premium is added to the loan amount at
consummation.
This final rule will be effective on
June 1, 2013. 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) interpretive rules and
statements of policy; or (3) as otherwise
provided for good cause found and
published with the rule. 5 U.S.C. 553(d).
This final rule does not establish any
requirements, but rather delays the
effective date of § 1026.36(i) until
January 10, 2014. Therefore, under
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 relives a
restriction. 5 U.S.C. 553(d)(1). Further,
making the delay effective on June 1,
2013, will ensure that § 1026.36(i) does
not take effect until the Bureau has an
opportunity to clarify the provision’s
applicability to transactions other than
those in which a lump-sum premium is
added to the loan amount at closing,
facilitating compliance with the statute
and helping to ensure that the Final
Rule does not have adverse unintended
consequences. Therefore, The Bureau
further finds it has good cause pursuant
to section 553(d)(3) of the APA to
dispense with the 30 day delayed
effective date requirement because, on
balance, the need to implement
immediately the delay of the June 1,
2013 effective date of § 1026.36(i)
outweighs the need for affected parties
to prepare for this delay.
IV. Section 1022(b)(2) of the DoddFrank Act
In developing the final rule, the
Bureau has considered the potential
benefits, costs, and impacts.10 The
10 Section 1022(b)(2)(A) of the Dodd-Frank Act,
12 U.S.C. 5521(b)(2), directs the Bureau, when
prescribing a rule under the Federal consumer
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Bureau requested comment on its
preliminary analysis as well as
submissions of additional data that
could inform the Bureau’s analysis of
the benefits, costs, and impacts of the
final rule. The Bureau has consulted, or
offered to consult with, the prudential
regulators, HUD, USDA, FHFA, the
Federal Trade Commission, and the
Department of the Treasury, including
regarding consistency with any
prudential, market, or systemic
objectives administered by such
agencies.
In part VII of the Final Rule, the
Bureau previously considered the costs,
benefits, and impact of § 1026.36(i) as
adopted by the Final Rule. The Bureau
believes that, compared to the baseline
established by the Final Rule,11 the
delay of the effective date for
§ 1026.36(i) will generally benefit
creditors and the credit insurance
industry by delaying the start of ongoing
compliance costs, and allowing time for
a process to clarify the scope and
compliance requirements of the
regulation. Creditors and the credit
insurance industry will benefit to the
extent that the changes eliminate any
disruptions in the provision of credit
insurance products to consumers while
interpretive questions concerning
§ 1026.36(i) are addressed. The Bureau
believes that delaying the effective date
of § 1026.36(i) will also delay the
consumer benefit that would result from
allowing the rule to take effect.
Specifically, delaying the effective date
would delay the prohibition on lumpsum credit insurance premiums added
to the loan amount at closing, which
Congress prohibited through TILA
section 129C(d).
In addition, the final rule is not
expected to have a differential 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 or on consumers in
rural areas. The Bureau does not believe
that the final rule will meaningfully
financial laws, to consider the potential benefits
and costs of regulation to consumers and covered
persons, including the potential reduction of access
by consumers to consumer financial products or
services; the impact on insured 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. Section 1022(b)(2)(B) of the DoddFrank Act directs the Bureau to consult with
appropriate prudential regulators or other Federal
agencies regarding consistency with prudential,
market, or systemic objectives that those agencies
administer.
11 The Bureau has discretion in any rulemaking
to choose an appropriate scope of analysis with
respect to potential benefits and costs and an
appropriate baseline.
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reduce consumers’ access to consumer
products and services.
V. Regulatory Flexibility Act Analysis
The Regulatory Flexibility Act (RFA)
generally requires an agency to conduct
an initial regulatory flexibility analysis
(IRFA) and a final regulatory flexibility
analysis (FRFA) of any rule subject to
notice-and-comment rulemaking
requirements.12 These analyses must
‘‘describe the impact of the final rule on
small entities.’’ 13 An IRFA or FRFA is
not required if the agency certifies that
the rule will not have a significant
economic impact on a substantial
number of small entities,14 or if the
agency considers a series of closely
related rules as one rule for purposes of
complying with the IRFA or FRFA
requirements.15 The Bureau also is
subject to certain additional procedures
under the RFA involving the convening
of a panel to consult with small
business representatives prior to
proposing a rule for which an IRFA is
required.16
The Bureau did not perform an IFRA
for the proposed rule because it
determined and certified that the
proposed rule, if adopted, would not
have a significant economic impact on
a substantial number of small entities.
The Bureau did not receive any
comments regarding its certification of
no significant economic impact. The
Bureau concludes that a FRFA is not
required for this final rule because it
will not have a significant impact on a
substantial number of small entities. As
discussed above, the final rule will
delay the June 1, 2013 effective date of
§ 1026.36(i), as adopted by the Final
Rule, until January 10, 2014. The delay
in effective date will benefit small
creditors by delaying the start of any
ongoing compliance costs.
Accordingly, the undersigned hereby
certifies that the final rule will not have
a significant economic impact on a
substantial number of small entities.
12 5
U.S.C. 601 et seq.
U.S.C. 603(a). For purposes of assessing the
impacts of the final rule on small entities, ‘‘small
entities’’ is defined in the RFA to include small
businesses, small not-for-profit organizations, and
small government jurisdictions. 5 U.S.C. 601(6). A
‘‘small business’’ is determined by application of
Small Business Administration regulations and
reference to the North American Industry
Classification System (NAICS) classifications and
size standards. 5 U.S.C. 601(3). A ‘‘small
organization’’ is any ‘‘not-for-profit enterprise
which is independently owned and operated and is
not dominant in its field.’’ 5 U.S.C. 601(4). A ‘‘small
governmental jurisdiction’’ is the government of a
city, county, town, township, village, school
district, or special district with a population of less
than 50,000. 5 U.S.C. 601(5).
14 5 U.S.C. 605(b).
15 5 U.S.C. 605(c).
16 5 U.S.C. 609.
13 5
E:\FR\FM\31MYR1.SGM
31MYR1
Federal Register / Vol. 78, No. 105 / Friday, May 31, 2013 / Rules and Regulations
VI. Paperwork Reduction Act Analysis
The Bureau may not conduct or
sponsor, and, notwithstanding any other
provision of law, a respondent is not
required to respond to, an information
collection unless it displays a currently
valid OMB control number. Regulation
Z currently contains collections of
information approved by OMB. The
Bureau’s OMB control number for
Regulation Z is 3170–0015. However,
the Bureau has determined that this
final rule will not materially alter these
collections of information or impose any
new recordkeeping, reporting, or
disclosure requirements on the public
that would constitute collections of
information requiring approval under
the Paperwork Reduction Act, 44 U.S.C.
3501 et seq.
Dated: May 29, 2013.
Richard Cordray,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2013–13023 Filed 5–30–13; 8:45 am]
BILLING CODE 4810–25–P
DEPARTMENT OF TRANSPORTATION
For service information
identified in this AD, contact
Turbomeca, 40220 Tarnos, France;
phone: 33 (0)5 59 74 40 00; telex: 570
042; fax: 33 (0)5 59 74 45 15. You may
view this service information at the
FAA, Engine & Propeller Directorate, 12
New England Executive Park,
Burlington, MA. For information on the
availability of this material at the FAA,
call 781–238–7125.
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 Operations office 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.
FOR FURTHER INFORMATION CONTACT:
Federal Aviation Administration
[Docket No. FAA–2013–0024; Directorate
Identifier 2000–NE–12–AD; Amendment 39–
17469; AD 2013–11–09]
James Lawrence, Aerospace Engineer,
Engine Certification Office, FAA, Engine
& Propeller Directorate, 12 New England
Executive Park, Burlington, MA 01803;
phone: 781–238–7176; fax: 781–238–
7199; email: james.lawrence@faa.gov.
RIN 2120–AA64
SUPPLEMENTARY INFORMATION:
Airworthiness Directives; Turbomeca
S.A. Turboshaft Engines
Discussion
14 CFR Part 39
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule.
tkelley on DSK3SPTVN1PROD with RULES
AGENCY:
SUMMARY: We are superseding an
existing airworthiness directive (AD) for
Turbomeca S.A. Arrius 2B, 2B1, and 2F
turboshaft engines. That AD currently
requires replacement of injector
manifolds and borescope-inspection of
the flame tube and the high-pressure
(HP) turbine area for possible damage.
This new AD requires, depending on the
engine model, repetitive replacements
of fuel injection manifolds and the
privilege injector, or, repetitive
replacements of the privilege injector.
This AD was prompted by a report that
the corrective actions of the existing AD
were insufficient to eliminate the unsafe
condition. We are issuing this AD to
prevent an uncommanded in-flight
shutdown of Arrius 2B1 and 2F
turboshaft engines and damage to the
helicopter.
DATES:
This AD is effective July 5, 2013.
VerDate Mar<15>2010
16:51 May 30, 2013
Jkt 229001
We issued a notice of proposed
rulemaking (NPRM) to amend 14 CFR
part 39 to supersede AD 2001–08–14R1,
Amendment 39 14423 (71 FR 2993,
January 19, 2006). That AD applies to
Turbomeca S.A. Arrius 2B, 2B1, and 2F
turboshaft engines. The Arrius 2B
engine model is no longer listed because
it is no longer in service and has been
removed from the engine Type
Certificate Data Sheet No. E34NE, as
requested by the manufacturer. The
NPRM published in the Federal
Register on February 7, 2013 (78 FR
9007). That NPRM proposed to require,
depending on the engine model,
repetitive replacements of fuel injection
manifolds and the privilege injector, or,
repetitive replacements of the privilege
injector.
Comments
We gave the public the opportunity to
participate in developing this AD. The
following presents the comments
received on the proposal and the FAA’s
response to each comment.
PO 00000
Frm 00011
Fmt 4700
Sfmt 4700
32551
Request To Change Paragraphs (f)(1)
and (g)(1)
Turbomeca USA requested that we
change compliance paragraph (f)(1) by
deleting ‘‘or since last inspection of the
fuel injection manifolds and privilege
injector, whichever comes first.’’ The
commenter also requested that we
change paragraph (g)(1) by deleting ‘‘or
since last inspection of the privilege
injector, whichever comes first.’’ The
commenter stated that paragraphs (f)(1)
and (g)(1) speak to initial replacement
where subsequent replacements are
addressed in paragraphs (f)(3) and (g)(3).
There is no required inspection for this
reason prior to reaching the allocated
hours of operation time-since-new
(TSN) so there will be no ‘‘last
inspection’’ at this point. The fuel
injection manifolds and privilege
injector (Arrius 2B1 engines) and, the
privilege injector (Arrius 2F engines)
will not have been in service long
enough to have an inspection
performed. Also, an inspection (unless
leading to a replacement) if done for
whatever reason, will not ‘‘reset’’ the
allocated hours (200 or 400) of operation
TSN counter. Only a replacement will,
which is why the commenter thinks the
allocated hours (200 or 400) of operation
TSN limit is sufficient.
We agree. Because there is no specific
inspection requirement, fuel injection
manifolds and privilege injectors
(Arrius 2B1 enignes) and, privilege
injectors (Arrius 2F engines) can be
removed from one Arrius 2B1 engine
and installed in another Arrius
2B1engine or from one Arrius 2F engine
and installed in another Arrius 2F
engine as noted in their respective
service bulletins (SBs). We anticipated
that those used components would
undergo an inspection and flow check,
prior to reinstallation. However, the fuel
injection manifolds and privilege
injectors are limited to the allocated
hours (200 or 400) of operation TSN
regardless of reuse. We changed
paragraphs (f)(1) and (g)(1) of the AD as
requested above.
Request To Change Compliance
Paragraphs (f)(2) and (g)(2)
Turbomeca USA requested that we
change compliance paragraph (f)(2) by
adding ‘‘when replacing the fuel
injection manifolds and privilege
injector for the first time.’’ The
commenter also requested that we
change paragraph (g)(2) by adding
‘‘when replacing the privilege injector
for the first time.’’ The commenter
stated that without adding these words,
these paragraphs would require a
borescope inspection each time the
E:\FR\FM\31MYR1.SGM
31MYR1
Agencies
[Federal Register Volume 78, Number 105 (Friday, May 31, 2013)]
[Rules and Regulations]
[Pages 32547-32551]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-13023]
=======================================================================
-----------------------------------------------------------------------
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1026
[Docket No. CFPB-2013-0013]
RIN 3170-AA37
Loan Originator Compensation Requirements Under the Truth in
Lending Act (Regulation Z); Prohibition on Financing Credit Insurance
Premiums; Delay of Effective Date
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Final rule; Delay of Effective Date.
-----------------------------------------------------------------------
SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
issuing a final rule delaying the June 1, 2013, effective date of a
prohibition on creditors financing credit insurance premiums in
connection with certain consumer credit transactions secured by a
dwelling. The prohibition was adopted in the Loan Originator
Compensation Requirements under the Truth in Lending Act (Regulation Z)
Final Rule, issued on January 20, 2013, and published in the Federal
Register on February 15, 2013. The Bureau is delaying the effective
date until January 10, 2014, to permit the Bureau to clarify, before
the provision takes effect, its applicability to transactions other
than those in which a lump-sum premium is added to the loan amount at
closing. The new effective date will be January 10, 2014, but the
Bureau will solicit comment on the appropriate effective date at the
same time that it seeks comment on clarifications. (The Bureau is not
contemplating extending the effective date beyond January 10, 2014.)
DATES: The final rule published February 15, 2013, at 78 FR 11280, is
effective January 10, 2014, with the exception of the amendments to 12
CFR 1026.36(h) and (i), which are effective June 1, 2013. This rule
delays the effective date of the amendment to 12 CFR 1026.36(i) until
January 10, 2014.
FOR FURTHER INFORMATION CONTACT: Richard Arculin or Daniel Brown,
Counsels, Office of Regulations, at (202) 435-7700.
SUPPLEMENTARY INFORMATION:
I. Background
In January 2013, the Bureau issued several final rules concerning
mortgage markets in the United States, pursuant to the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Dodd-Frank Act).\1\ One of
these final rules was the Loan Originator Compensation Requirements
Under the Truth in Lending Act (Regulation Z) (Final Rule).\2\ The
Final Rule implemented Dodd-Frank Act amendments to the Truth in
Lending Act (TILA) addressing loan originator compensation;
qualifications of, and registration or licensing of loan originators;
compliance procedures for depository institutions; mandatory
arbitration; and the financing of single-premium credit insurance. With
regard to the financing of single-premium credit insurance, the Final
Rule included a provision implementing the Dodd-Frank Act section 1414
amendment that added new TILA section 129C(d), 15 U.S.C. 1639c(d). That
provision prohibits creditors from financing premiums or fees for
certain credit insurance products in connection with certain consumer
credit transactions secured by a dwelling. The Bureau implemented this
provision by adopting Sec. 1026.36(i).
---------------------------------------------------------------------------
\1\ Public Law 111-203, 124 Stat. 1376 (2010).
\2\ 78 FR 11279 (Feb. 15, 2013).
---------------------------------------------------------------------------
A. Title XIV Rulemaking Effective Dates
In enacting the Dodd-Frank Act, Congress significantly amended the
statutory requirements governing a number of mortgage practices,
including loan originator compensation. Under the statute, most of
these new requirements would have taken effect automatically on January
21, 2013, if the Bureau had not issued implementing regulations by that
date.\3\ To avoid uncertainty and potential disruption in the national
mortgage market at a time of economic vulnerability, the Bureau issued
several final rules (Title XIV Rulemakings) in January 2013, including
the Final Rule issued on January 20, 2013, to implement these new
statutory provisions and provide for an orderly transition. To allow
the mortgage industry sufficient time to comply with the new rules, the
Bureau established January 10, 2014--one year after
[[Page 32548]]
issuance of the earliest of the Title XIV Rulemakings--as the effective
date for most of the Title XIV Rulemakings, including most provisions
of the Final Rule. However, the Bureau identified certain provisions
that it believed did not present significant implementation burdens for
industry, including Sec. 1026.36(h) on mandatory arbitration clauses
and waivers of certain consumer rights and Sec. 1026.36(i) on
financing single-premium credit insurance, as adopted by the Final
Rule. For these provisions, the Bureau set an earlier effective date of
June 1, 2013.
---------------------------------------------------------------------------
\3\ Dodd-Frank Act section 1400(c), 15 U.S.C. 1601 note.
---------------------------------------------------------------------------
B. Implementation Initiative for New Mortgage Rules
On February 13, 2013, the Bureau announced an initiative to support
implementation of its new mortgage rules (Implementation Plan),\4\
under which the Bureau would work with the mortgage industry to ensure
that the Title XIV Rulemakings can be implemented accurately and
expeditiously. The Implementation Plan included (1) coordination with
other agencies; (2) publication of plain-language guides to the new
rules; (3) publication of updates, such as additional corrections,
adjustments, and clarifications of the new rules, as needed; (4)
publication of readiness guides for the new rules; and (5) education of
consumers on the new rules.
---------------------------------------------------------------------------
\4\ Consumer Financial Protection Bureau Lays Out Implementation
Plan for New Mortgage Rules. Press Release. Feb. 13, 2013.
---------------------------------------------------------------------------
This final rule, which delays the effective date of the provision
on financing single-premium credit insurance, is one of several updates
to the Title XIV Rulemakings. The purpose of these updates is to
address important questions raised by industry, consumer groups, or
other agencies. The update addressed by this final rule was given
priority because the effective date for Sec. 1026.36(i) was June 1,
2013, and certainty regarding compliance is a matter of some urgency.
The Bureau intends to publish a proposal shortly to seek further
comment on clarifications to the provision as discussed further below.
II. Legal Authority
On July 21, 2011, section 1061 of the Dodd-Frank Act transferred to
the Bureau the ``consumer financial protection functions'' previously
vested in certain other Federal agencies, including the Board of
Governors of the Federal Reserve System. The term ``consumer financial
protection function'' is defined to include ``all authority to
prescribe rules or issue orders or guidelines pursuant to any Federal
consumer financial law, including performing appropriate functions to
promulgate and review such rules, orders, and guidelines.'' 12 U.S.C.
5581(a)(1). TILA is a Federal consumer financial law. Dodd-Frank Act
section 1002(14), 12 U.S.C. 5481(14) (defining ``Federal consumer
financial law'' to include the ``enumerated consumer laws'' and the
provisions of title X of the Dodd-Frank Act); Dodd-Frank Act section
1002(12), 12 U.S.C. 5481(12) (defining ``enumerated consumer laws'' to
include TILA). Accordingly, the Bureau has authority to issue
regulations pursuant to TILA.
As amended by the Dodd-Frank Act, TILA section 105(a), 15 U.S.C.
1604(a), directs the Bureau to prescribe regulations to carry out the
purposes of TILA and provides that such regulations may contain
additional requirements, classifications, differentiations, or other
provisions, and may provide for such adjustments and exceptions for all
or any class of transactions, that the Bureau judges are necessary or
proper to effectuate the purposes of TILA, to prevent circumvention or
evasion thereof, or to facilitate compliance. Further, under Dodd-Frank
Act section 1022(b)(1), 15 U.S.C. 5512(b)(1), the Bureau has general
authority to prescribe rules as may be necessary or appropriate to
enable the Bureau to administer and carry out the purposes and
objectives of the Federal consumer financial laws, and to prevent
evasions thereof. The Bureau is delaying the effective date until
January 10, 2014, pursuant to its TILA section 105(a) and Dodd-Frank
Act section 1022(b)(1) authority. The Bureau believes such a delay will
facilitate compliance and help ensure that the Final Rule does not have
adverse unintended consequences. In particular, the delay will permit
the Bureau to clarify, before Sec. 1026.36(i) takes effect, its
applicability to transactions other than those in which a lump-sum
premium is added to the loan amount at closing.
III. Effective Date
As discussed above, Dodd-Frank Act section 1414 added TILA section
129C(d), which generally prohibits a creditor from financing any
premiums or fees for credit insurance in connection with any
residential mortgage loan or with any extension of credit under an
open-end consumer credit plan secured by the consumer's principal
dwelling.\5\ The prohibition applies to credit life, credit disability,
credit unemployment, credit property insurance, and other similar
products. The same provision states, however, that the prohibition does
not apply to credit insurance for which premiums or fees are calculated
and paid in full on a monthly basis or to credit unemployment insurance
for which the premiums are reasonable, the creditor receives no
compensation, and the premiums are paid pursuant to a separate
insurance contract and are not paid to the creditor's affiliate.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 1639C(d).
---------------------------------------------------------------------------
In a proposed rule published on September 7, 2012,\6\ the Bureau
proposed to implement this provision through Sec. 1026.36(i), which
generally tracks the statutory language. In the proposal, the Bureau
stated its belief that the provision was generally straightforward but
sought comment on whether any issues raised by the provision required
clarification. Anticipating that few, if any, clarifications would be
necessary and that accordingly industry would not require significant
time to accommodate any clarifications of the final rule, the Bureau
also sought comment on whether the provision should become effective
sooner than January 2014.\7\
---------------------------------------------------------------------------
\6\ 77 FR 55272 (Sept. 7, 2012).
\7\ Id.
---------------------------------------------------------------------------
The Bureau received very few public comments on the substance of
the proposed prohibition or the earlier effective date. Consumer groups
sought clarification on the provision's applicability to certain
factual scenarios where credit insurance premiums are charged
periodically, rather than as a lump-sum added to the loan amount at
closing. They also urged the Bureau to provide an early effective date
for the provision. The Bureau did not receive any public comments from
the credit insurance industry. The Bureau received some limited
comments from creditors concerning the general prohibition, but these
comments did not address the applicability of the provision to
transactions in which premiums are charged periodically. In the
preamble to the Final Rule, the Bureau provided some explanation
concerning the provision's applicability to credit insurance premiums
charged periodically, rather than as a lump-sum added to the loan
amount at closing.
A. Post-Final Rule Concerns
Since publication of the Final Rule, industry stakeholders have
expressed concern that the regulation text and preamble left
substantial uncertainty about whether, and under what circumstances,
premiums for certain credit insurance products can be
[[Page 32549]]
charged on a periodic basis in connection with a covered consumer
credit transaction secured by a dwelling. Specifically, representatives
of credit unions and credit insurers have raised a concern that the
Final Rule could be interpreted to prohibit any level or levelized
credit insurance premiums, which they believe are not financed by the
creditor and/or should be permissible as calculated and paid in full on
a monthly basis.\8\ These stakeholders pointed out that the preamble to
the Final Rule states that ``charging a fixed monthly charge for the
credit insurance that does not decline as the loan balance declines
would fail to meet the requirement for the premium to be `calculated .
. . on a monthly basis' [and] . . . [a]s a result, this practice would
fail to satisfy the conditions for the exclusion from what constitutes
`financ[ing], directly or indirectly' credit insurance premiums.''
Thus, absent clarification by the Bureau, the Final Rule could be
interpreted to assume that any level or levelized premiums are both
financed by the creditor and not calculated and paid on a monthly
basis--and therefore they are prohibited.
---------------------------------------------------------------------------
\8\ The term ``levelized'' premiums refers to a flat monthly
payment that is derived from a decreasing monthly premium
alternative arrangement, and the term ``level'' premium refers to
premiums for which there is no decreasing monthly premium
alternative arrangement available, such as for level mortgage life
insurance.
---------------------------------------------------------------------------
Credit insurance company representatives raised several
interpretive questions relating to this concern, which they have urged
the Bureau to address. They stated that levelized premiums are, in
fact, ``calculated . . . on a monthly basis,'' because an actuarially
derived rate is multiplied by a fixed monthly principal and interest
payment to derive the monthly insurance premium. They also stated that
level premiums are ``calculated . . . on a monthly basis'' because an
actuarially derived rate is multiplied by the consumer's original loan
amount to derive the monthly insurance premium. Accordingly, they
believe that level and levelized credit insurance premiums should be
excluded from the prohibition on creditors financing credit insurance
premiums so long as they are also paid in full on a monthly basis. In
addition they stated that, even if the Bureau concludes that level or
levelized credit insurance premiums are not ``calculated'' on a monthly
basis within the meaning of the exclusion from the prohibition, they
are not ``financed'' by a creditor and thus are not prohibited by the
statutory provision.
Accordingly, they have requested clarification on Sec.
1026.36(i)'s applicability to these credit insurance products and also
have expressed concern regarding their ability to comply timely, given
that the Final Rule provided an effective date for Sec. 1026.36(i) of
June 1, 2013.
In light of the interpretive questions that have arisen since
publication of the Final Rule, the Bureau intends to publish a proposal
to seek further comment on the provision shortly. In that proposal, the
Bureau intends, among other things to seek public comment, including
from industry stakeholders and consumers, on (1) the applicability of
the prohibition to transactions in which credit insurance premiums are
charged periodically; and (2) given these proposed clarifications to
Sec. 1026.36(i), what effective date would be appropriate.
B. May 10, 2013 Proposal To Delay Effective Date
On May 10, 2013, the Bureau issued a proposed rule seeking comment
on a temporary delay of the June 1, 2013 effective date of Sec.
1026.36(i).\9\ The Bureau made clear in the proposal that it
contemplated delaying the effective date only as long as necessary for
any clarifications to be proposed, finalized, and implemented, and
sought public comment on two issues: (1) whether the effective date
should be delayed; and (2) if so, what the new effective date should
be. The Bureau also stated it was concerned that, if the effective date
were not delayed, creditors could face uncertainty about whether and
under what circumstances credit insurance premiums may be charged
periodically in connection with covered consumer credit transactions
secured by a dwelling, which could result in a substantial compliance
burden to industry. Finally, the Bureau noted that it intends to
propose and again seek comment on the effective date for any
clarifications to Sec. 1026.36(i) as part of the forthcoming proposal.
---------------------------------------------------------------------------
\9\ 78 FR 27308 (May 10, 2013).
---------------------------------------------------------------------------
C. Public Comments
The Bureau received approximately 70 comments from credit unions
and other industry members supporting the proposal to delay the
effective date. These commenters agreed that interpretive questions
exist regarding the application of the provision to credit insurance
premiums charged periodically, in particular to level or levelized
premiums. These commenters strongly supported the proposal to delay the
effective date while those questions are addressed in the upcoming
proposal, and they generally suggested a delay of the effective date
until January 10, 2014, or alternatively 6 to 12 months after the
upcoming proposal is finalized. The Bureau also received a joint
comment from consumer groups opposing the proposal. The consumer groups
stated that they did not believe any real interpretive questions exist
that require a delay of the effective date or an additional proposal.
D. Final Rule
Upon consideration of these public comments, the Bureau is
finalizing the proposal to delay the effective date for Sec.
1026.36(i). The Bureau is persuaded that significant interpretive
questions exist regarding the application of the provision to credit
insurance charged periodically, which it intends to address in a
forthcoming proposal. The Bureau also agrees with industry commenters
that, if the effective date were not delayed, creditors would face
uncertainty about whether and under what circumstances credit insurance
premiums may be charged periodically in connection with covered
consumer credit transactions secured by a dwelling, which could result
in a substantial compliance burden to industry.
Rather than suspend the effective date indefinitely pending the
clarification, the Bureau believes it is appropriate to adopt a new
effective date for Sec. 1026.36(i) of January 10, 2014, which is
consistent with the effective date for most of the Title XIV
Rulemakings. Thus, Sec. 1026.36(i) will be effective for any
transactions where applications were received by the creditor on or
after January 10, 2014.
However, with respect to the January 10, 2014 effective date, the
Bureau emphasizes that it intends to issue a new proposal shortly that
will, among other things, specifically seek comment on the appropriate
effective date in light of the proposal to provide additional
clarifying amendments. The Bureau is mindful of the public comments it
received in connection with this notice that suggest creditors will
need time to adjust certain credit insurance premium billing practices
once the clarifications are finalized. However, any such amendments
will not be finalized until the Bureau has proposed amendments to Sec.
1026.36(i), appropriately considered public comment, and issued a final
rule in connection with the upcoming proposal. The Bureau is also
mindful of the fact that the protections provided by Congress would
have applied effective January 21, 2013, had the Bureau not promulgated
implementing regulations.
[[Page 32550]]
The Bureau expects that industry will use the intervening time to
review systems and begin making appropriate modifications to facilitate
the implementation process as quickly as practicable once the
additional clarifications are finalized.
Accordingly, the Bureau is delaying the June 1, 2013 effective date
for the provision to January 10, 2014, while the Bureau considers
addressing interpretive questions concerning the provision's
applicability to transactions other than those in which a lump-sum
premium is added to the loan amount at consummation.
This final rule will be effective on June 1, 2013. 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) interpretive rules and statements of policy; or (3) as otherwise
provided for good cause found and published with the rule. 5 U.S.C.
553(d). This final rule does not establish any requirements, but rather
delays the effective date of Sec. 1026.36(i) until January 10, 2014.
Therefore, under 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 relives a
restriction. 5 U.S.C. 553(d)(1). Further, making the delay effective on
June 1, 2013, will ensure that Sec. 1026.36(i) does not take effect
until the Bureau has an opportunity to clarify the provision's
applicability to transactions other than those in which a lump-sum
premium is added to the loan amount at closing, facilitating compliance
with the statute and helping to ensure that the Final Rule does not
have adverse unintended consequences. Therefore, The Bureau further
finds it has good cause pursuant to section 553(d)(3) of the APA to
dispense with the 30 day delayed effective date requirement because, on
balance, the need to implement immediately the delay of the June 1,
2013 effective date of Sec. 1026.36(i) outweighs the need for affected
parties to prepare for this delay.
IV. Section 1022(b)(2) of the Dodd-Frank Act
In developing the final rule, the Bureau has considered the
potential benefits, costs, and impacts.\10\ The Bureau requested
comment on its preliminary analysis as well as submissions of
additional data that could inform the Bureau's analysis of the
benefits, costs, and impacts of the final rule. The Bureau has
consulted, or offered to consult with, the prudential regulators, HUD,
USDA, FHFA, the Federal Trade Commission, and the Department of the
Treasury, including regarding consistency with any prudential, market,
or systemic objectives administered by such agencies.
---------------------------------------------------------------------------
\10\ Section 1022(b)(2)(A) of the Dodd-Frank Act, 12 U.S.C.
5521(b)(2), directs the Bureau, when prescribing a rule under the
Federal consumer financial laws, to consider the potential benefits
and costs of regulation to consumers and covered persons, including
the potential reduction of access by consumers to consumer financial
products or services; the impact on insured 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. Section 1022(b)(2)(B) of the Dodd-Frank
Act directs the Bureau to consult with appropriate prudential
regulators or other Federal agencies regarding consistency with
prudential, market, or systemic objectives that those agencies
administer.
---------------------------------------------------------------------------
In part VII of the Final Rule, the Bureau previously considered the
costs, benefits, and impact of Sec. 1026.36(i) as adopted by the Final
Rule. The Bureau believes that, compared to the baseline established by
the Final Rule,\11\ the delay of the effective date for Sec.
1026.36(i) will generally benefit creditors and the credit insurance
industry by delaying the start of ongoing compliance costs, and
allowing time for a process to clarify the scope and compliance
requirements of the regulation. Creditors and the credit insurance
industry will benefit to the extent that the changes eliminate any
disruptions in the provision of credit insurance products to consumers
while interpretive questions concerning Sec. 1026.36(i) are addressed.
The Bureau believes that delaying the effective date of Sec.
1026.36(i) will also delay the consumer benefit that would result from
allowing the rule to take effect. Specifically, delaying the effective
date would delay the prohibition on lump-sum credit insurance premiums
added to the loan amount at closing, which Congress prohibited through
TILA section 129C(d).
---------------------------------------------------------------------------
\11\ The Bureau has discretion in any rulemaking to choose an
appropriate scope of analysis with respect to potential benefits and
costs and an appropriate baseline.
---------------------------------------------------------------------------
In addition, the final rule is not expected to have a differential
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
or on consumers in rural areas. The Bureau does not believe that the
final rule will meaningfully reduce consumers' access to consumer
products and services.
V. Regulatory Flexibility Act Analysis
The Regulatory Flexibility Act (RFA) generally requires an agency
to conduct an initial regulatory flexibility analysis (IRFA) and a
final regulatory flexibility analysis (FRFA) of any rule subject to
notice-and-comment rulemaking requirements.\12\ These analyses must
``describe the impact of the final rule on small entities.'' \13\ An
IRFA or FRFA is not required if the agency certifies that the rule will
not have a significant economic impact on a substantial number of small
entities,\14\ or if the agency considers a series of closely related
rules as one rule for purposes of complying with the IRFA or FRFA
requirements.\15\ The Bureau also is subject to certain additional
procedures under the RFA involving the convening of a panel to consult
with small business representatives prior to proposing a rule for which
an IRFA is required.\16\
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\12\ 5 U.S.C. 601 et seq.
\13\ 5 U.S.C. 603(a). For purposes of assessing the impacts of
the final rule on small entities, ``small entities'' is defined in
the RFA to include small businesses, small not-for-profit
organizations, and small government jurisdictions. 5 U.S.C. 601(6).
A ``small business'' is determined by application of Small Business
Administration regulations and reference to the North American
Industry Classification System (NAICS) classifications and size
standards. 5 U.S.C. 601(3). A ``small organization'' is any ``not-
for-profit enterprise which is independently owned and operated and
is not dominant in its field.'' 5 U.S.C. 601(4). A ``small
governmental jurisdiction'' is the government of a city, county,
town, township, village, school district, or special district with a
population of less than 50,000. 5 U.S.C. 601(5).
\14\ 5 U.S.C. 605(b).
\15\ 5 U.S.C. 605(c).
\16\ 5 U.S.C. 609.
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The Bureau did not perform an IFRA for the proposed rule because it
determined and certified that the proposed rule, if adopted, would not
have a significant economic impact on a substantial number of small
entities. The Bureau did not receive any comments regarding its
certification of no significant economic impact. The Bureau concludes
that a FRFA is not required for this final rule because it will not
have a significant impact on a substantial number of small entities. As
discussed above, the final rule will delay the June 1, 2013 effective
date of Sec. 1026.36(i), as adopted by the Final Rule, until January
10, 2014. The delay in effective date will benefit small creditors by
delaying the start of any ongoing compliance costs.
Accordingly, the undersigned hereby certifies that the final rule
will not have a significant economic impact on a substantial number of
small entities.
[[Page 32551]]
VI. Paperwork Reduction Act Analysis
The Bureau may not conduct or sponsor, and, notwithstanding any
other provision of law, a respondent is not required to respond to, an
information collection unless it displays a currently valid OMB control
number. Regulation Z currently contains collections of information
approved by OMB. The Bureau's OMB control number for Regulation Z is
3170-0015. However, the Bureau has determined that this final rule will
not materially alter these collections of information or impose any new
recordkeeping, reporting, or disclosure requirements on the public that
would constitute collections of information requiring approval under
the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.
Dated: May 29, 2013.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2013-13023 Filed 5-30-13; 8:45 am]
BILLING CODE 4810-25-P