Truth in Lending Act (Regulation Z) Adjustment to Asset-Size Exemption Threshold, 79674-79675 [2015-32293]

Download as PDF 79674 Federal Register / Vol. 80, No. 246 / Wednesday, December 23, 2015 / Rules and Regulations B. Regulatory Flexibility Act Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a). C. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR 1320), the agency reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule. List of Subjects in 12 CFR Part 1003 Banking, Banks, Credit unions, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations. Authority and Issuance For the reasons set forth in the preamble, the Bureau amends Regulation C, 12 CFR part 1003, as set forth below: PART 1003—HOME MORTGAGE DISCLOSURE (REGULATION C) 1. The authority citation for part 1003 continues to read as follows: ■ Authority: 12 U.S.C. 2803, 2804, 2805, 5512, 5581. 2. In Supplement I to Part 1003, under Section 1003.2—Definitions, under the definition ‘‘Financial institution’’, paragraph 2 is revised to read as follows: ■ Supplement I to Part 1003—Staff Commentary * * * * * Section 1003.2—Definitions * * * * * Financial Institution asabaliauskas on DSK5VPTVN1PROD with RULES * * * * * 2. Adjustment of exemption threshold for banks, savings associations, and credit unions. For data collection in 2016, the asset-size exemption threshold is $44 million. Banks, savings associations, and credit unions with assets at or below $44 million as of December 31, 2015, are exempt from collecting data for 2016. * * * * * Dated: December 16, 2015. Richard Cordray, Director, Bureau of Consumer Financial Protection. [FR Doc. 2015–32285 Filed 12–22–15; 8:45 am] BILLING CODE 4810–AM–P VerDate Sep<11>2014 16:43 Dec 22, 2015 Jkt 238001 BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1026 Truth in Lending Act (Regulation Z) Adjustment to Asset-Size Exemption Threshold Bureau of Consumer Financial Protection. ACTION: Final rule; official interpretation. AGENCY: The Bureau is amending the official commentary that interprets the requirements of the Bureau’s Regulation Z (Truth in Lending) to reflect a change in the asset size threshold for certain creditors to qualify for an exemption to the requirement to establish an escrow account for a higher-priced mortgage loan based on the annual percentage change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI–W) for the 12month period ending in November. The exemption threshold is adjusted to decrease to $2.052 billion from $2.060 billion. The adjustment is based on the 0.4 percent decrease in the average of the CPI–W for the 12-month period ending in November 2015. Therefore, creditors with assets of less than $2.052 billion (including assets of certain affiliates) as of December 31, 2015, are exempt, if other requirements of Regulation Z also are met, from establishing escrow accounts for higherpriced mortgage loans in 2016. This asset limit will also apply during a grace period, in certain circumstances, with respect to transactions with applications received before April 1 of 2017. The adjustment to the escrows exemption asset-size threshold will also decrease a similar threshold for small-creditor portfolio and balloon-payment qualified mortgages. Balloon-payment qualified mortgages that satisfy all applicable criteria, including being made by creditors that have (together with certain affiliates) total assets below the threshold, are also excepted from the prohibition on balloon payments for high-cost mortgages. DATES: This final rule is effective January 1, 2016. FOR FURTHER INFORMATION CONTACT: James Wylie or Jaclyn Maier, Counsels, Office of Regulations, at (202) 435–7700. SUPPLEMENTARY INFORMATION: SUMMARY: I. Background The Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank Act) amended TILA section 129D(a) to contain a general requirement that an escrow account be PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 established by a creditor to pay for property taxes and insurance premiums for certain first-lien higher-priced mortgage loan transactions. TILA section 129(D) also generally permits an exemption from the higher-priced mortgage loan escrow requirement for a creditor that meets certain requirements, including any asset-size threshold the Bureau may establish. In the 2013 Escrows Final Rule,1 the Bureau established such an asset-size threshold of $2,000,000,000, which would adjust automatically each year, based on the year-to year change in the average of the CPI–W for each 12-month period ending in November, with rounding to the nearest million dollars.2 For 2015, the threshold was $2.060 billion. The Bureau recently revised the criteria for small creditors, and rural and underserved areas, for purposes of certain special provisions and exemptions from various requirements provided to certain small creditors under the Bureau’s mortgage rules. As part of this revision the Bureau made certain changes that affect how the asset-size threshold applies. The Bureau revised the rule to include in the calculation of the asset-size threshold the assets of the creditor’s affiliates that regularly extended covered transactions secured by first liens during the applicable period. The Bureau also added a grace period from calendar year to calendar year to allow an otherwise eligible creditor that exceeded the asset limit in the preceding calendar year (but not in the calendar year before the preceding year) to continue to operate as a small creditor with respect to transactions with applications received before April 1 of the current calendar year.3 During the 12-month period ending in November 2015, the average of the CPI–W decreased by 0.4 percent. As a result, the exemption threshold is decreased to $2.052 billion for 2016. Thus, if the creditor’s assets together with the assets of its affiliates that regularly extended first-lien covered transactions during calendar year 2015 are less than $2.052 billion on December 31, 2015, and it meets the other requirements of § 1026.35(b)(2)(iii) it will be exempt in 2016 from the escrowaccounts requirement for higher-priced mortgage loans and will also be exempt from the escrow-accounts requirement for higher-priced mortgage loans for purposes of any loan consummated in 2017 for which the application was received before April 1, 2017. The 1 78 FR 4726 (Jan. 22, 2013). 12 CFR 1026.35(b)(2)(iii)(C). 3 See 80 FR 59943, 59951 (Oct. 2, 2015). 2 See E:\FR\FM\23DER1.SGM 23DER1 Federal Register / Vol. 80, No. 246 / Wednesday, December 23, 2015 / Rules and Regulations adjustment to the escrows exemption asset-size threshold will also decrease the threshold for small-creditor portfolio and balloon-payment qualified mortgages under Regulation Z. The requirements for small-creditor portfolio qualified mortgages at § 1026.43(e)(5)(i)(D) reference the asset threshold in § 1026.35(b)(2)(iii)(C). Likewise, the requirements for balloonpayment qualified mortgages at § 1026.43(f)(1)(vi) reference the asset threshold in § 1026.35(b)(2)(iii)(C). Balloon-payment qualified mortgages that satisfy all applicable criteria in §§ 1026.43(f)(1)(i) through (vi) and 1026.43(f)(2), or the conditions set forth in § 1026.43(e)(6) for covered transactions for which the application is received before April 1, 2016,4 including being made by creditors that have (together with certain affiliates) total assets below the threshold in § 1026.35(b)(2)(iii)(C), are also excepted from the prohibition on balloon payments for high-cost mortgages in § 1026.32(d)(1)(ii)(C). asabaliauskas on DSK5VPTVN1PROD with RULES II. Procedural Requirements A. Administrative Procedure Act Under the Administrative Procedure Act (APA), notice and opportunity for public comment are not required if the Bureau finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest. 5 U.S.C. 553(b)(B). Pursuant to this final rule, comment 35(b)(2)(iii)–1 in Regulation Z is amended to update the exemption threshold. The amendment in this final rule is technical, and merely applies the formula previously established in Regulation Z for determining any adjustments to the exemption threshold. For these reasons, the Bureau has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary. Therefore, the amendment is adopted in final form. Section 553(d) of the APA generally requires publication of a final rule 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 by the agency for good cause found and published with the rule. 5 U.S.C. 553(d). At a minimum, the Bureau believes the 4 The Bureau extended the temporary provision in § 1026.43(e)(6) from covered transactions consummated on or before January 10, 2016 to covered transactions for which the application was received on or before April 1, 2016. See 80 FR 59943, 59959 (Oct. 2, 2015). VerDate Sep<11>2014 16:43 Dec 22, 2015 Jkt 238001 amendments fall under the third exception to section 553(d). The Bureau finds that there is good cause to make the amendments effective on January 1, 2016. The amendment in this rule is technical, and applies the method previously established in the agency’s regulations for automatic adjustments to the threshold. B. Regulatory Flexibility Act Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a). C. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR 1320), the agency reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule. List of Subjects in 12 CFR Part 1026 Advertising, Consumer protection, Credit, Credit unions, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending. 79675 Paragraph 35(b)(2)(iii) 1. * * * iii. * * * E. Under § 1026.35(b)(2)(iii)(C), the $2,000,000,000 asset threshold adjusts automatically each year based on the year-toyear change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers, not seasonally adjusted, for each 12-month period ending in November, with rounding to the nearest million dollars. The Bureau will publish notice of the asset threshold each year by amending this comment. For calendar year 2016, the asset threshold is $2,052,000,000. A creditor that together with the assets of its affiliates that regularly extended first-lien covered transactions during calendar year 2015 has total assets of less than $2,052,000,000 on December 31, 2015, satisfies this criterion for purposes of any loan consummated in 2016 and for purposes of any loan consummated in 2017 for which the application was received before April 1, 2017. For historical purposes: * * * * * Dated: December 16, 2015. Richard Cordray, Director, Bureau of Consumer Financial Protection. [FR Doc. 2015–32293 Filed 12–22–15; 8:45 am] BILLING CODE 4810–AM–P Authority and Issuance For the reasons set forth in the preamble, the Bureau amends Regulation Z, 12 CFR part 1026, as set forth below: PART 1026—TRUTH IN LENDING (REGULATION Z) 1. The authority citation for part 1026 continues to read as follows: ■ Authority: 12 U.S.C. 2601, 2603–2605, 2607, 2609, 2617, 3353, 5511, 5512, 5532, 5581; 15 U.S.C. 1601 et seq. 2. In Supplement I to Part 1026— Official Interpretations, under Section 1026.35—Requirements for HigherPriced Mortgage Loans, 35(b)(2) Exemptions, Paragraph 35(b)(2)(iii), paragraph 1.iii.E introductory text, as amended at 80 FR 59968 (Oct. 2, 2015), is revised to read as follows: ■ SUPPLEMENT I TO PART 1026— OFFICIAL INTERPRETATIONS * * * * * Subpart E—Special Rules for Certain Home Mortgage Transactions * * * * * Section 1026.35—Requirements for HigherPriced Mortgage Loans * * * * * 35(b)(2) Exemptions * PO 00000 * * Frm 00021 * Fmt 4700 * Sfmt 4700 FEDERAL HOUSING FINANCE AGENCY 12 CFR Part 1227 RIN 2590–AA60 Suspended Counterparty Program Federal Housing Finance Agency. ACTION: Final rule. AGENCY: This final rule establishes requirements and procedures for the Federal Housing Finance Agency’s (FHFA) Suspended Counterparty Program. Under the Suspended Counterparty Program, FHFA may issue suspension orders directing the regulated entities (Fannie Mae, Freddie Mac, and the eleven Federal Home Loan Banks (Banks)) to cease doing business with an individual or institution, and any affiliate thereof, for a specified period of time where such party has committed fraud or other financial misconduct involving a mortgage transaction. The final rule revises the interim final rule published on October 23, 2013. The final rule excludes from the types of covered transactions that would be subject to a final suspension order any transaction involving a residential mortgage loan if the loan is secured by the respondent’s own personal or SUMMARY: E:\FR\FM\23DER1.SGM 23DER1

Agencies

[Federal Register Volume 80, Number 246 (Wednesday, December 23, 2015)]
[Rules and Regulations]
[Pages 79674-79675]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32293]


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

BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1026


Truth in Lending Act (Regulation Z) Adjustment to Asset-Size 
Exemption Threshold

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Final rule; official interpretation.

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

SUMMARY: The Bureau is amending the official commentary that interprets 
the requirements of the Bureau's Regulation Z (Truth in Lending) to 
reflect a change in the asset size threshold for certain creditors to 
qualify for an exemption to the requirement to establish an escrow 
account for a higher-priced mortgage loan based on the annual 
percentage change in the average of the Consumer Price Index for Urban 
Wage Earners and Clerical Workers (CPI-W) for the 12-month period 
ending in November. The exemption threshold is adjusted to decrease to 
$2.052 billion from $2.060 billion. The adjustment is based on the 0.4 
percent decrease in the average of the CPI-W for the 12-month period 
ending in November 2015. Therefore, creditors with assets of less than 
$2.052 billion (including assets of certain affiliates) as of December 
31, 2015, are exempt, if other requirements of Regulation Z also are 
met, from establishing escrow accounts for higher-priced mortgage loans 
in 2016. This asset limit will also apply during a grace period, in 
certain circumstances, with respect to transactions with applications 
received before April 1 of 2017. The adjustment to the escrows 
exemption asset-size threshold will also decrease a similar threshold 
for small-creditor portfolio and balloon-payment qualified mortgages. 
Balloon-payment qualified mortgages that satisfy all applicable 
criteria, including being made by creditors that have (together with 
certain affiliates) total assets below the threshold, are also excepted 
from the prohibition on balloon payments for high-cost mortgages.

DATES: This final rule is effective January 1, 2016.

FOR FURTHER INFORMATION CONTACT: James Wylie or Jaclyn Maier, Counsels, 
Office of Regulations, at (202) 435-7700.

SUPPLEMENTARY INFORMATION:

I. Background

    The Dodd-Frank Wall Street Reform and Consumer Protection Act 
(Dodd-Frank Act) amended TILA section 129D(a) to contain a general 
requirement that an escrow account be established by a creditor to pay 
for property taxes and insurance premiums for certain first-lien 
higher-priced mortgage loan transactions. TILA section 129(D) also 
generally permits an exemption from the higher-priced mortgage loan 
escrow requirement for a creditor that meets certain requirements, 
including any asset-size threshold the Bureau may establish.
    In the 2013 Escrows Final Rule,\1\ the Bureau established such an 
asset-size threshold of $2,000,000,000, which would adjust 
automatically each year, based on the year-to year change in the 
average of the CPI-W for each 12-month period ending in November, with 
rounding to the nearest million dollars.\2\ For 2015, the threshold was 
$2.060 billion. The Bureau recently revised the criteria for small 
creditors, and rural and underserved areas, for purposes of certain 
special provisions and exemptions from various requirements provided to 
certain small creditors under the Bureau's mortgage rules. As part of 
this revision the Bureau made certain changes that affect how the 
asset-size threshold applies. The Bureau revised the rule to include in 
the calculation of the asset-size threshold the assets of the 
creditor's affiliates that regularly extended covered transactions 
secured by first liens during the applicable period. The Bureau also 
added a grace period from calendar year to calendar year to allow an 
otherwise eligible creditor that exceeded the asset limit in the 
preceding calendar year (but not in the calendar year before the 
preceding year) to continue to operate as a small creditor with respect 
to transactions with applications received before April 1 of the 
current calendar year.\3\
---------------------------------------------------------------------------

    \1\ 78 FR 4726 (Jan. 22, 2013).
    \2\ See 12 CFR 1026.35(b)(2)(iii)(C).
    \3\ See 80 FR 59943, 59951 (Oct. 2, 2015).
---------------------------------------------------------------------------

    During the 12-month period ending in November 2015, the average of 
the CPI-W decreased by 0.4 percent. As a result, the exemption 
threshold is decreased to $2.052 billion for 2016. Thus, if the 
creditor's assets together with the assets of its affiliates that 
regularly extended first-lien covered transactions during calendar year 
2015 are less than $2.052 billion on December 31, 2015, and it meets 
the other requirements of Sec.  1026.35(b)(2)(iii) it will be exempt in 
2016 from the escrow-accounts requirement for higher-priced mortgage 
loans and will also be exempt from the escrow-accounts requirement for 
higher-priced mortgage loans for purposes of any loan consummated in 
2017 for which the application was received before April 1, 2017. The

[[Page 79675]]

adjustment to the escrows exemption asset-size threshold will also 
decrease the threshold for small-creditor portfolio and balloon-payment 
qualified mortgages under Regulation Z. The requirements for small-
creditor portfolio qualified mortgages at Sec.  1026.43(e)(5)(i)(D) 
reference the asset threshold in Sec.  1026.35(b)(2)(iii)(C). Likewise, 
the requirements for balloon-payment qualified mortgages at Sec.  
1026.43(f)(1)(vi) reference the asset threshold in Sec.  
1026.35(b)(2)(iii)(C). Balloon-payment qualified mortgages that satisfy 
all applicable criteria in Sec. Sec.  1026.43(f)(1)(i) through (vi) and 
1026.43(f)(2), or the conditions set forth in Sec.  1026.43(e)(6) for 
covered transactions for which the application is received before April 
1, 2016,\4\ including being made by creditors that have (together with 
certain affiliates) total assets below the threshold in Sec.  
1026.35(b)(2)(iii)(C), are also excepted from the prohibition on 
balloon payments for high-cost mortgages in Sec.  1026.32(d)(1)(ii)(C).
---------------------------------------------------------------------------

    \4\ The Bureau extended the temporary provision in Sec.  
1026.43(e)(6) from covered transactions consummated on or before 
January 10, 2016 to covered transactions for which the application 
was received on or before April 1, 2016. See 80 FR 59943, 59959 
(Oct. 2, 2015).
---------------------------------------------------------------------------

II. Procedural Requirements

A. Administrative Procedure Act

    Under the Administrative Procedure Act (APA), notice and 
opportunity for public comment are not required if the Bureau finds 
that notice and public comment are impracticable, unnecessary, or 
contrary to the public interest. 5 U.S.C. 553(b)(B). Pursuant to this 
final rule, comment 35(b)(2)(iii)-1 in Regulation Z is amended to 
update the exemption threshold. The amendment in this final rule is 
technical, and merely applies the formula previously established in 
Regulation Z for determining any adjustments to the exemption 
threshold. For these reasons, the Bureau has determined that publishing 
a notice of proposed rulemaking and providing opportunity for public 
comment are unnecessary. Therefore, the amendment is adopted in final 
form.
    Section 553(d) of the APA generally requires publication of a final 
rule 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 by the agency for good cause found and published 
with the rule. 5 U.S.C. 553(d). At a minimum, the Bureau believes the 
amendments fall under the third exception to section 553(d). The Bureau 
finds that there is good cause to make the amendments effective on 
January 1, 2016. The amendment in this rule is technical, and applies 
the method previously established in the agency's regulations for 
automatic adjustments to the threshold.

B. Regulatory Flexibility Act

    Because no notice of proposed rulemaking is required, the 
Regulatory Flexibility Act does not require an initial or final 
regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a).

C. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3506; 5 CFR 1320), the agency reviewed this final rule. No collections 
of information pursuant to the Paperwork Reduction Act are contained in 
the final rule.

List of Subjects in 12 CFR Part 1026

    Advertising, Consumer protection, Credit, Credit unions, Mortgages, 
National banks, Reporting and recordkeeping requirements, Savings 
associations, Truth in lending.

Authority and Issuance

    For the reasons set forth 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 continues to read as follows:

    Authority:  12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353, 
5511, 5512, 5532, 5581; 15 U.S.C. 1601 et seq.


0
2. In Supplement I to Part 1026--Official Interpretations, under 
Section 1026.35--Requirements for Higher-Priced Mortgage Loans, 
35(b)(2) Exemptions, Paragraph 35(b)(2)(iii), paragraph 1.iii.E 
introductory text, as amended at 80 FR 59968 (Oct. 2, 2015), is revised 
to read as follows:

SUPPLEMENT I TO PART 1026--OFFICIAL INTERPRETATIONS

* * * * *

Subpart E--Special Rules for Certain Home Mortgage Transactions

* * * * *

Section 1026.35--Requirements for Higher-Priced Mortgage Loans

* * * * *

35(b)(2) Exemptions

* * * * *

Paragraph 35(b)(2)(iii)

    1. * * *
    iii. * * *
    E. Under Sec.  1026.35(b)(2)(iii)(C), the $2,000,000,000 asset 
threshold adjusts automatically each year based on the year-to-year 
change in the average of the Consumer Price Index for Urban Wage 
Earners and Clerical Workers, not seasonally adjusted, for each 12-
month period ending in November, with rounding to the nearest 
million dollars. The Bureau will publish notice of the asset 
threshold each year by amending this comment. For calendar year 
2016, the asset threshold is $2,052,000,000. A creditor that 
together with the assets of its affiliates that regularly extended 
first-lien covered transactions during calendar year 2015 has total 
assets of less than $2,052,000,000 on December 31, 2015, satisfies 
this criterion for purposes of any loan consummated in 2016 and for 
purposes of any loan consummated in 2017 for which the application 
was received before April 1, 2017. For historical purposes:
* * * * *

    Dated: December 16, 2015.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2015-32293 Filed 12-22-15; 8:45 am]
BILLING CODE 4810-AM-P