Appraisals for Higher-Priced Mortgage Loans Exemption Threshold, 51394-51400 [2016-18058]
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Federal Register / Vol. 81, No. 150 / Thursday, August 4, 2016 / Proposed Rules
Done in Washington, DC, this 29th day of
July 2016.
Edward Avalos,
Under Secretary for Marketing and Regulatory
Programs.
[FR Doc. 2016–18452 Filed 8–3–16; 8:45 am]
BILLING CODE 3410–34–P
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 34
[Docket No. OCC–2015–0021]
RIN 1557–AD99
FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Docket No. R–1443]
RIN 7100–AD 90
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1026
[Docket No. CFPB–2016–0035]
RIN 3170–AA11
Appraisals for Higher-Priced Mortgage
Loans Exemption Threshold
Board of Governors of the
Federal Reserve System (Board); Bureau
of Consumer Financial Protection
(Bureau); and Office of the Comptroller
of the Currency, Treasury (OCC).
ACTION: Proposed rule; request for
public comment.
AGENCY:
The OCC, the Board and the
Bureau are publishing proposed rules
amending the official interpretations for
their regulations that implement section
129H of the Truth in Lending Act
(TILA). Section 129H of TILA
establishes special appraisal
requirements for ‘‘higher-risk
mortgages,’’ termed ‘‘higher-priced
mortgage loans’’ or ‘‘HPMLs’’ in the
agencies’ regulations. The OCC, the
Board, the Bureau, the Federal Deposit
Insurance Corporation (FDIC), the
National Credit Union Administration
(NCUA) and the Federal Housing
Finance Agency (FHFA) (collectively,
the Agencies) issued joint final rules
implementing these requirements,
effective January 18, 2014. The
Agencies’ rules exempted, among other
loan types, transactions of $25,000 or
less, and required that this loan amount
be adjusted annually based on any
annual percentage increase in the
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SUMMARY:
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Consumer Price Index for Urban Wage
Earners and Clerical Workers (CPI–W).
If there is no annual percentage increase
in the CPI–W, the OCC, the Board and
the Bureau will not adjust this
exemption threshold from the prior
year. The proposal would memorialize
this as well as the agencies’ calculation
method for determining the adjustment
in years following a year in which there
is no annual percentage increase in the
CPI–W.
DATES: Comments must be received on
or before September 6, 2016.
ADDRESSES: Interested parties are
encouraged to submit written comments
jointly to the OCC, the Board, and the
Bureau. Commenters are encouraged to
use the title ‘‘Appraisals for HigherPriced Mortgage Loans’’ to facilitate the
organization and distribution of
comments among the agencies.
Interested parties are invited to submit
written comments to:
OCC: Because paper mail in the
Washington, DC area and at the OCC is
subject to delay, commenters are
encouraged to submit comments by the
Federal eRulemaking Portal or email, if
possible. Please use the title ‘‘Appraisals
for Higher-Priced Mortgage Loans’’ to
facilitate the organization and
distribution of the comments. You may
submit comments by any of the
following methods:
• Federal eRulemaking Portal—
‘‘regulations.gov’’: Go to https://
www.regulations.gov. Enter ‘‘Docket ID
OCC–2015–0021’’ in the Search box and
click ‘‘Search.’’ Results can be filtered
using the filtering tools on the left side
of the screen. Click on ‘‘Comment Now’’
to submit public comments.
• Click on the ‘‘Help’’ tab on the
Regulations.gov home page to get
information on using Regulations.gov,
including instructions for submitting
public comments.
• Email:
regs.comments@occ.treas.gov.
• Mail: Legislative and Regulatory
Activities Division, 400 7th Street SW.,
suite 3E–218, mail stop 9W–11,
Washington, DC 20219.
• Hand Delivery/Courier: 400 7th
Street SW., suite 3E–218, mail stop 9W–
11, Washington, DC 20219.
• Fax: (571) 465–4326.
Instructions: You must include
‘‘OCC’’ as the agency name and ‘‘Docket
ID OCC–2015–0021’’ in your comment.
In general, OCC will enter all comments
received into the docket and publish
them on the Regulations.gov Web site
without change, including any business
or personal information that you
provide such as name and address
information, email addresses, or phone
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numbers. Comments received, including
attachments and other supporting
materials, are part of the public record
and subject to public disclosure. Do not
enclose any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
You may review comments and other
related materials that pertain to this
notice of proposed rulemaking by any of
the following methods:
• Viewing Comments Electronically:
Go to https://www.regulations.gov. Enter
‘‘Docket ID OCC–2015–0021’’ in the
Search box and click ‘‘Search.’’
Comments can be filtered by Agency
using the filtering tools on the left side
of the screen.
• Click on the ‘‘Help’’ tab on the
Regulations.gov home page to get
information on using Regulations.gov,
including instructions for viewing
public comments, viewing other
supporting and related materials, and
viewing the docket after the close of the
comment period.
• Viewing Comments Personally: You
may personally inspect and photocopy
comments at the OCC, 400 7th Street
SW., Washington, DC. For security
reasons, the OCC requires that visitors
make an appointment to inspect
comments. You may do so by calling
(202) 649–6700 or, for persons who are
deaf or hard of hearing, TTY, (202) 649–
5597. Upon arrival, visitors will be
required to present valid governmentissued photo identification and submit
to security screening in order to inspect
and photocopy comments.
Docket: You may also view or request
available background documents and
project summaries using the methods
described above.
Board: You may submit comments,
identified by Docket No. R–1443 or RIN
7100 AD–90, by any of the following
methods:
• Agency Web site: https://
www.federalreserve.gov. Follow the
instructions for submitting comments at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Email:
regs.comments@federalreserve.gov.
Include the docket number in the
subject line of the message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Robert deV. Frierson,
Secretary, Board of Governors of the
Federal Reserve System, 20th Street and
Constitution Avenue NW., Washington,
DC 20551.
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Federal Register / Vol. 81, No. 150 / Thursday, August 4, 2016 / Proposed Rules
All public comments will be made
available on the Board’s Web site at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical
reasons. Accordingly, comments will
not be edited to remove any identifying
or contact information. Public
comments may also be viewed
electronically or in paper in Room MP–
500 of the Board’s Martin Building (20th
and C Streets NW.) between 9:00 a.m.
and 5:00 p.m. on weekdays.
Bureau: You may submit comments,
identified by Docket No. CFPB–2016–
0035 or RIN 3170–AA11, by any of the
following methods:
• Email:
FederalRegisterComments@cfpb.gov.
Include Docket No. CFPB–2016–0035 or
RIN 3170–AA11 in the subject line of
the email.
• Electronic: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Mail: Monica Jackson, Office of the
Executive Secretary, Consumer
Financial Protection Bureau, 1700 G
Street NW., Washington, DC 20552.
• Hand Delivery/Courier: Monica
Jackson, Office of the Executive
Secretary, Consumer Financial
Protection Bureau, 1275 First Street NE.,
Washington, DC 20002.
Instructions: All submissions should
include the agency name and docket
number or Regulatory Information
Number (RIN) for this rulemaking.
Because paper mail in the Washington,
DC area and at the Bureau is subject to
delay, commenters are encouraged to
submit comments electronically. In
general, all comments received will be
posted without change to https://
www.regulations.gov. In addition,
comments will be available for public
inspection and copying at 1275 First
Street NE., Washington, DC 20002, on
official business days between the hours
of 10 a.m. and 5 p.m. eastern time. You
can make an appointment to inspect the
documents by telephoning (202) 435–
7275.
All comments, including attachments
and other supporting materials, will
become part of the public record and
subject to public disclosure. Sensitive
personal information, such as account
numbers or Social Security numbers,
should not be included. Comments will
not be edited to remove any identifying
or contact information.
FOR FURTHER INFORMATION CONTACT:
OCC: MaryAnn Nash, Counsel,
Legislative and Regulatory Affairs
Division, (202) 649–6287; for persons
who are deaf and hard of hearing TTY,
(202) 649–5597. Board: Lorna M. Neill,
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Senior Counsel, Division of Consumer
and Community Affairs, Board of
Governors of the Federal Reserve
System, at (202) 452–3667; for users of
Telecommunications Device for the Deaf
(TDD) only, contact (202) 263–4869.
Bureau: Shaakira Gold-Ramirez,
Paralegal Specialist, Jaclyn Maier,
Counsel, Office of Regulations,
Consumer Financial Protection Bureau,
at (202) 435–7700.
SUPPLEMENTARY INFORMATION:
I. Background
The Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010
(Dodd-Frank Act) amended the Truth in
Lending Act (TILA) to add special
appraisal requirements for ‘‘higher-risk
mortgages.’’ 1 In January 2013, the
Agencies issued a joint final rule
implementing these requirements and
adopted the term ‘‘higher-priced
mortgage loan’’ (HPML) instead of
‘‘higher-risk mortgage’’ (the January
2013 Final Rule).2 In July 2013, the
Agencies proposed additional
exemptions from the January 2013 Final
Rule (the 2013 Supplemental Proposed
Rule).3 In December 2013, the Agencies
issued a supplemental final rule with
additional exemptions from the January
2013 Final Rule (the December 2013
Supplemental Final Rule).4 Among
other exemptions, the Agencies adopted
an exemption from the new HPML
appraisal rules for transactions of
$25,000 or less, to be adjusted annually
for inflation.
The Bureau’s, the OCC’s, and the
Board’s versions of the January 2013
Final Rule and December 2013
Supplemental Final Rule and
corresponding official interpretations
are substantively identical. The FDIC,
NCUA, and FHFA adopted the Bureau’s
version of the regulations under the
January 2013 Final Rule and December
2013 Supplemental Final Rule.5
Section 34.203(b)(2) of subpart G of
part 34 of the OCC’s regulations,
§ 226.43(b)(2) of the Board’s Regulation
Z, and § 1026.35(c)(2)(ii) of the Bureau’s
Regulation Z, and their accompanying
interpretations,6 provide that the
1 Public Law 111–203 section 1471, 124 Stat.
1376 (2010), codified at TILA section 129H, 15
U.S.C. 1639h.
2 78 FR 10368 (Feb. 13, 2013).
3 78 FR 48548 (Aug. 8, 2013).
4 78 FR 78520 (Dec. 26, 2013).
5 See NCUA: 12 CFR 722.3; FHFA: 12 CFR part
1222. Although the FDIC adopted the Bureau’s
version of the regulation, the FDIC did not issue its
own regulation containing a cross-reference to the
Bureau’s version. See 78 FR 10368, 10370 (Feb. 13,
2013).
6 See 12 CFR part 34, Appendix C to Subpart G,
comment 203(b)(2)–1 (OCC); 12 CFR part 226,
Supplement I, comment 43(b)(2)–1 (Board); and 12
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exemption threshold for smaller loans
will be adjusted effective January 1 of
each year based on any annual
percentage increase in the Consumer
Price Index for Urban Wage Earners and
Clerical Workers (CPI–W) that was in
effect on the preceding June 1. Any
increase in the threshold amount will be
rounded to the nearest $100 increment.
For example, if the annual percentage
increase in the CPI–W would result in
a $950 increase in the threshold
amount, the threshold amount will be
increased by $1,000. However, if the
annual percentage increase in the CPI–
W would result in a $949 increase in the
threshold amount, the threshold amount
will be increased by $900. If there is no
annual percentage increase in the CPI–
W, the OCC, the Board, and the Bureau
will not adjust the threshold amounts
from the prior year.7
II. Commentary Revision
The OCC, the Board and the Bureau
are proposing new commentary to
memorialize the calculation method
used by the agencies each year to adjust
the exemption threshold. The new
commentary is substantively identical
for § 34.203(b)(2) of subpart G of part 34
of the OCC’s regulations, § 226.43(b)(2)
of the Board’s Regulation Z, and
§ 1026.35(c)(2)(ii) of the Bureau’s
Regulation Z. For ease of reference, the
‘‘Commentary Revision’’ refers only to
the section numbers of the commentary
that will published in the Bureau’s
Regulation Z at 12 CFR part 1026,
Supplement I.
Comment 35(c)(2)(ii)–1 to the
Bureau’s Regulation Z currently
provides the threshold amount in effect
during a particular period and details
the rules the agencies use for rounding
the threshold calculation to the nearest
$100 or $1,000 increment, as discussed
above in part I, ‘‘Background.’’ The
OCC, the Board and the Bureau are
proposing to revise comment
35(c)(2)(ii)–1 by moving the text
regarding the threshold amount that is
in effect during a particular period to a
new proposed comment 35(c)(2)(ii)–3.
The discussion of how the agencies
round the threshold calculation would
remain in comment 35(c)(2)(ii)–1.
Current comments 35(c)(2)(ii)–2 and
35(c)(2)(ii)–3 would be renumbered as
proposed comments 35(c)(2)(ii)–5 and
35(c)(2)(ii)–6, respectively.
CFR part 1026, Supplement I, comment 35(c)(2)(ii)–
1 (Bureau).
7 See 78 FR 48548, 48565 (Aug. 8, 2013) (‘‘Thus,
under the proposal, if the CPI–W decreases in an
annual period, the percentage increase would be
zero, and the dollar amount threshold for the
exemption would not change.’’).
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As the Agencies have stated
previously,8 if there is no annual
percentage increase in the CPI–W, the
OCC, the Board, and the Bureau will not
adjust the exemption threshold from the
prior year. This position is consistent
with the Board’s and the Bureau’s
approach in adjusting the coverage
thresholds for the Consumer Leasing
Act (CLA) and TILA, based on Section
1100E(b) of the Dodd-Frank Act, which
states that the threshold must be
adjusted by the ‘‘annual percentage
increase’’ in the CPI–W (emphasis
added). The Board and the Bureau are
publishing similar amendments to the
commentaries to each of their respective
regulations implementing the CLA
(Regulation M) and TILA (Regulation Z)
elsewhere in the Federal Register.9
For the HPML appraisal rule
exemption for smaller loans, the OCC,
the Board, and the Bureau are proposing
to memorialize this concept in proposed
comment 35(c)(2)(ii)–2, which would
provide that if the CPI–W in effect on
June 1 does not increase from the CPI–
W in effect on June 1 of the previous
year, the threshold amount effective the
following January 1 through December
31 will not change from the previous
year. For example, if the threshold in
effect from January 1, 2019, through
December 31, 2019, is $27,500 and the
CPI–W in effect on June 1 of 2019,
indicates a 1.1 percent decrease from
the CPI–W in effect on June 1, 2018, the
threshold in effect for January 1, 2020,
through December 31, 2020, will remain
$27,500.
Proposed comment 35(c)(2)(ii)–2
would further set forth the calculation
method the agencies would use in years
following a year in which the exemption
threshold was not adjusted because
there was no increase in the CPI–W
from the previous year. Specifically, as
set forth under proposed comment
35(c)(2)(ii)–2, for the years after a year
in which the threshold did not change
because the CPI–W in effect on June 1
decreased from the CPI–W in effect on
June 1 of the previous year, the
threshold is calculated by applying the
annual percentage change in the CPI–W
to the dollar amount that would have
resulted if the decreases and any
subsequent increases in the CPI–W had
been taken into account. Proposed
comment 35(c)(2)(ii)–2.i further states
that, if the resulting amount is greater
than the current threshold, then the
threshold effective January 1 the
8 See
78 FR 48548, 48565 (Aug. 8, 2013) and 80
FR 73943, 73944 (Nov. 27, 2015).
9 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (‘‘[A]n
annual period of deflation or no inflation would not
require a change in the threshold amount.’’).
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following year will increase
accordingly.
For example, assume that the
threshold in effect from January 1, 2019,
through December 31, 2019, is $27,500
and that, due to a 1.1 percent decrease
from the CPI–W in effect on June 1,
2018, to the CPI–W in effect on June 1,
2019, the threshold in effect from
January 1, 2020, through December 31,
2020, remains at $27,500. If, however,
the threshold had been adjusted
downward to reflect the decrease in the
CPI–W over that time period, the
threshold in effect from January 1, 2020,
through December 31, 2020, would have
been $27,200. Further assume that the
CPI–W in effect on June 1, 2020,
increased by 1.6 percent from the CPI–
W in effect on June 1, 2019. The
calculation for the threshold that will be
in effect from January 1, 2021, through
December 31, 2021, is based on the
impact of a 1.6 percent increase in the
CPI–W on $27,200, rather than $27,500,
resulting in a 2021 threshold of $27,600.
Furthermore, comment 35(c)(2)(ii)–
2.ii states that, if the resulting amount
calculated is equal to or less than the
current threshold, then the threshold
effective January 1 the following year
will not change, but future increases
will be calculated based on the amount
that would have resulted. To illustrate,
assume in the example above that the
CPI–W in effect on June 1, 2020,
increased by only 0.6 percent from the
CPI–W in effect on June 1, 2019. The
calculation for the threshold that will be
in effect from January 1, 2021, through
December 31, 2021, is based on the
impact of a 0.6 percent increase in the
CPI–W on $27,200. The resulting
amount is $27,400, which is lower than
$27,500, the threshold in effect from
January 1, 2020, through December 31,
2020. Therefore, the threshold in effect
from January 1, 2021, through December
31, 2021, will remain $27,500. However,
the calculation for the threshold that
will be in effect from January 1, 2022,
through December 31, 2022, will apply
the percentage change in the CPI–W to
$27,400, the amount that would have
resulted based on the 0.6 percent change
from the CPI–W in effect on June 1,
2019, to the CPI–W in effect on June 1,
2020.
The agencies request comment on all
aspects of the proposed rule.
III. Regulatory Analysis
Bureau’s Dodd-Frank Act Section
1022(b)(2) Analysis
In developing this proposal, the
Bureau has considered potential
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benefits, costs, and impacts.10 In
addition, the Bureau has consulted, or
offered to consult with, the prudential
regulators, the Securities and Exchange
Commission, the Department of Housing
and Urban Development, the Federal
Housing Finance Agency, the Federal
Trade Commission, and the Department
of the Treasury, including regarding
consistency with any prudential,
market, or systemic objectives
administered by such agencies.
The Bureau has chosen to evaluate the
benefits, costs and impacts of the
proposed commentary against the
current state of the world, which takes
into account the current regulatory
regime. The Bureau is not aware of any
significant benefits or costs to
consumers or covered persons
associated with the proposal relative to
the baseline. The OCC, the Board, and
the Bureau previously stated that if
there is no annual percentage increase
in the CPI–W, then the agencies will not
adjust the exemption threshold from the
prior year.11 The proposal memorializes
this in official commentary. The
proposal also clarifies how the
threshold would be calculated for years
after a year in which the threshold did
not change. The Bureau believes that
this clarification memorializes the
method that the Bureau would be
expected to use: This method holds the
threshold fixed until a notional
threshold calculated using the Bureau’s
methodology, but taking into account
both decreases and increases in the CPI–
W, exceeds the actual threshold. The
Bureau requests comment on this point.
Thus, the Bureau believes that the
proposed rule does not change the
regulatory regime relative to the
baseline and creates no significant
benefits, costs, or impacts.
The proposed rule will have no
unique impact on depository
institutions or credit unions with $10
billion or less in assets as described in
section 1026(a) of the Dodd-Frank Act
or on rural consumers. The Bureau does
not expect this final rule to affect
consumers’ access to credit.
Regulatory Flexibility Act
OCC: The Regulatory Flexibility Act,
5 U.S.C. 601 et seq. (RFA) requires an
agency, in connection with a proposed
10 Specifically, section 1022(b)(2)(A) calls for the
Bureau to consider the potential benefits and costs
of a regulation to consumers and covered persons,
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 Act; and the
impact on consumers in rural areas.
11 78 FR 48547, 48565 (Aug. 8, 2013) and 80 FR
73943, 73944 (Nov. 27, 2015).
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rule, to prepare an Initial Regulatory
Flexibility Analysis describing the
impact of the proposed rule on small
entities (defined by the Small Business
Administration for purposes of the RFA
to include banking entities with total
assets of $550 million or less) or to
certify that the proposed rule would not
have a significant economic impact on
a substantial number of small entities.
As explained in the Commentary
Revision section of the preamble, this
proposed rule memorializes the
calculation method used by the OCC,
the Board, and the Bureau each year to
adjust the threshold for exemption from
the special appraisal requirements for
HPMLs and clarifies the agencies’
calculation method for determining the
adjustment in the years following a year
in which there is no annual percentage
increase in the CPI–W. The economic
impact of this proposed rule on national
banks and Federal savings associations,
regardless of size, is not expected to be
significant. Accordingly, the OCC
certifies that the proposed rule would
not have a significant economic impact
on a substantial number of OCCsupervised small entities.
Board: The Regulatory Flexibility Act
(RFA) requires an agency to publish an
initial regulatory flexibility analysis
with a proposed rule or certify that the
proposed rule will not have a significant
economic impact on a substantial
number of small entities.12 Based on its
analysis, and for the reasons stated
below, the Board believes that the rule
will not have a significant economic
impact on a substantial number of small
entities. Nevertheless, the Board is
publishing an initial regulatory
flexibility analysis and requests public
comment on all aspects of its analysis.
The Board will, if necessary, conduct a
final regulatory flexibility analysis after
considering the comments received
during the public comment period.
1. Statement of the need for, and
objectives of, the proposed rule. The
proposed rule would memorialize the
calculation method used by the Board
each year to adjust the exemption
threshold in accordance with Regulation
Z, 12 CFR 226.43(b)(2).
2. Small entities affected by the
proposed rule. The Board invites
comment on the effect of the proposed
rule on small entities. For purposes of
the RFA, the Small Business
Administration defines small entities to
include banking entities with total
assets of $550 million or less. Of Board
supervised institutions with an asset
size of $550 million or less as of March
12 See
5 U.S.C. 601 et seq.
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2016, 223 reported making 5,135 higherpriced mortgage loans in 2015.13
3. Recordkeeping, reporting, and
compliance requirements. The proposed
rule would not impose any
recordkeeping, reporting, or compliance
requirements.
4. Other Federal rules. The Board has
not identified any likely duplication,
overlap and/or potential conflict
between the proposed rule and any
Federal rule.
5. Significant alternatives to the
proposed revisions. The Board solicits
comment on any significant alternatives
that would reduce the regulatory burden
on small entities associated with this
proposed rule.
Bureau: The 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 noticeand-comment rulemaking
requirements.14 These analyses must
‘‘describe the impact of the proposed
rule on small entities’’.15 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.16
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.17
An IRFA is not required for this
proposal because if adopted it would
not have a significant economic impact
on a substantial number of small
entities. As discussed in the Bureau’s
Section 1022(b)(2) Analysis above, this
proposal does not introduce costs or
benefits to covered persons because the
13 Board supervised institutions include State
Member Banks, uninsured state branches and
agencies of foreign banks. The number of
institutions making higher-priced mortgage loans
and the number of higher-priced mortgage loans is
based on data reported pursuant to the Home
Mortgage Disclosure Act (HMDA), 12 U.S.C. 2801
et seq.
14 5 U.S.C. 601 et seq.
15 Id. at 603(a). For purposes of assessing the
impacts of the proposed rule on small entities,
‘‘small entities’’ is defined in the RFA to include
small businesses, small not-for-profit organizations,
and small government jurisdictions. Id. at 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. Id. at 601(3). A ‘‘small organization’’
is any ‘‘not-for-profit enterprise which is
independently owned and operated and is not
dominant in its field.’’ Id. at 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. Id. at 601(5).
16 Id. at 605(b).
17 Id. at 609.
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proposal seeks only to clarify the
method of threshold adjustment which
has already been established in previous
Agency rules. Therefore this proposed
rule would not have a significant impact
on small entities.
Certification
Accordingly, the Bureau Director, by
signing below, certifies that this
proposal, if adopted, would not have a
significant economic impact on a
substantial number of small entities.
Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995,18 the agencies
reviewed this proposed rule. No
collections of information pursuant to
the Paperwork Reduction Act are
contained in the proposed rule.
Unfunded Mandates Reform Act
The OCC has analyzed the notice of
proposed rulemaking under the factors
set forth in the Unfunded Mandates
Reform Act of 1995 (UMRA) (2 U.S.C.
1532). Under this analysis, the OCC
considered whether the proposed rule
includes a Federal mandate that may
result in the expenditure by State, local,
and Tribal governments, in the
aggregate, or by the private sector, of
$100 million or more in any one year
(adjusted annually for inflation).
The proposed rule memorializes the
calculation method used by the OCC,
the Board, and the Bureau each year to
adjust the threshold for exemption from
the special appraisal requirements for
HPMLs and clarifies the agencies’
calculation method for determining the
adjustment in the years following a year
in which there is no annual percentage
increase in the CPI–W. Because the
proposed rule is designed to clarify
existing rules, and does not introduce
any new requirements, the OCC has
determined that it would not result in
expenditures by State, local, and Tribal
governments or by the private sector, of
$100 million or more. Accordingly, the
OCC has not prepared a written
statement to accompany its proposed
rule.
List of Subjects
12 CFR Part 34
Appraisal, Appraiser, Banks, Banking,
Consumer protection, Credit, Mortgages,
National banks, Reporting and
recordkeeping requirements, Savings
associations, Truth in lending.
12 CFR Part 226
Advertising, Appraisal, Appraiser,
Consumer protection, Credit, Federal
18 44
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U.S.C. 3506; 5 CFR 1320.
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Reserve System, Mortgages, Reporting
and recordkeeping requirements, Truth
in lending.
12 CFR Part 1026
Advertising, Appraisal, Appraiser,
Banking, Banks, Consumer protection,
Credit, Credit unions, Mortgages,
National banks, Reporting and
recordkeeping requirements, Savings
associations, Truth in lending.
Department of the Treasury
Office of the Comptroller of the
Currency
Authority and Issuance
For the reasons set forth in the
preamble, the OCC proposes to amend
12 CFR part 34 as set forth below:
PART 34—REAL ESTATE LENDING
AND APPRAISALS
1. The authority citation for part 34 is
revised to read as follows:
■
Authority: 12 U.S.C. 1 et seq., 25b, 29, 93a,
371, 1463, 1464, 1465, 1701j–3, 1828(o), 3331
et seq., 5101 et seq., 5412(b)(2)(B) and 15
U.S.C. 1639h.
Subpart G—Appraisals for HigherPriced Mortgage Loans
2. In Appendix C to Subpart G, under
Section 34.203—Appraisals for HigherPriced Mortgage Loans, under paragraph
(b)(2):
■ i. Paragraph 1 is revised;
■ ii. Paragraphs 2 and 3 are redesignated as paragraphs 4 and 5,
respectively; and
■ iii. Paragraphs 2 and 3 are added.
The additions and revisions read as
follows:
■
Appendix C to Subpart G—OCC
Interpretations
*
*
*
*
*
Section 34.203—Appraisals for HigherPriced Mortgage Loans
*
*
*
*
*
34.203(b) Exemptions
*
*
*
*
*
rmajette on DSK2TPTVN1PROD with PROPOSALS
Paragraph 34.203(b)(2)
1. Threshold amount. For purposes of
§ 34.203(b)(2), the threshold amount in
effect during a particular period is the
amount stated in comment 203(b)(2)–3
for that period. The threshold amount is
adjusted effective January 1 of each year
by any annual percentage increase in
the Consumer Price Index for Urban
Wage Earners and Clerical Workers
(CPI–W) that was in effect on the
preceding June 1. Comment 203(b)(2)–3
will be amended to provide the
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Jkt 238001
threshold amount for the upcoming year
after the annual percentage change in
the CPI–W that was in effect on June 1
becomes available. Any increase in the
threshold amount will be rounded to the
nearest $100 increment. For example, if
the annual percentage increase in the
CPI–W would result in a $950 increase
in the threshold amount, the threshold
amount will be increased by $1,000.
However, if the annual percentage
increase in the CPI–W would result in
a $949 increase in the threshold
amount, the threshold amount will be
increased by $900.
2. No increase in the CPI–W. If the
CPI–W in effect on June 1 does not
increase from the CPI–W in effect on
June 1 of the previous year, the
threshold amount effective the
following January 1 through December
31 will not change from the previous
year. When this occurs, for the years
that follow, the threshold is calculated
based on the annual percentage change
in the CPI–W applied to the dollar
amount that would have resulted if
decreases and any subsequent increases
in the CPI–W had been taken into
account.
i. Net increases. If the resulting
amount is greater than the current
threshold, then the threshold effective
January 1 the following year will
increase accordingly.
ii. Net decreases. If the resulting
amount calculated is equal to or less
than the current threshold, then the
threshold effective January 1 the
following year will not change, but
future increases will be calculated based
on the amount that would have resulted.
3. Threshold. For purposes of
§ 34.203(b)(2), the threshold amount in
effect during a particular period is the
amount stated below for that period.
i. From January 18, 2014, through
December 31, 2014, the threshold
amount is $25,000.
ii. From January 1, 2015, through
December 31, 2015, the threshold
amount is $25,500.
iii. From January 1, 2016 through
December 31, 2016, the threshold
amount is $25,500.
4. Qualifying for exemption—in
general. A transaction is exempt under
§ 34.203(b)(2) if the creditor makes an
extension of credit at consummation
that is equal to or below the threshold
amount in effect at the time of
consummation.
5. Qualifying for exemption—
subsequent changes. A transaction does
not meet the condition for an exemption
under § 34.203(b)(2) merely because it is
used to satisfy and replace an existing
exempt loan, unless the amount of the
new extension of credit is equal to or
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Fmt 4702
Sfmt 4702
less than the applicable threshold
amount. For example, assume a closedend loan that qualified for a
§ 34.203(b)(2) exemption at
consummation in year one is refinanced
in year ten and that the new loan
amount is greater than the threshold
amount in effect in year ten. In these
circumstances, the creditor must
comply with all of the applicable
requirements of § 34.203 with respect to
the year ten transaction if the original
loan is satisfied and replaced by the
new loan, unless another exemption
from the requirements of § 34.203
applies. See § 34.203(b) and (d)(7).
*
*
*
*
*
Board of Governors of the Federal
Reserve System
Authority and Issuance
For the reasons set forth in the
preamble, the Board proposes to amend
Regulation Z, 12 CFR part 226, as set
forth below:
PART 226—TRUTH IN LENDING
(REGULATION Z)
3. The authority citation for part 226
continues to read as follows:
■
Authority: 12 U.S.C. 3806; 15 U.S.C. 1604,
1637(c)(5), 1639(l), and 1639h; Pub. L. 111–
24, section 2, 123 Stat. 1734; Pub. L. 111–
203, 124 Stat. 1376.
4. In Supplement I to part 226, under
Section 226.43—Appraisals for HigherRisk Mortgage Loans, under paragraph
43(b)(2), paragraph 1 is revised,
paragraphs 2 and 3 are re-numbered
paragraphs 4 and 5, respectively, and
new paragraphs 2 and 3 are added, to
read as follows:
■
Supplement I to Part 226—Official Staff
Interpretations
*
*
*
*
*
Subpart E—Special Rules for Certain
Home Mortgage Transactions
*
*
*
*
*
Section 226.43—Appraisals for HigherRisk Mortgage Loans
*
*
*
*
*
43(b) Exemptions
*
*
*
*
*
Paragraph 43(b)(2)
1. Threshold amount. For purposes of
§ 226.43(b)(2), the threshold amount in
effect during a particular period is the
amount stated in comment 43(b)(2)–3
for that period. The threshold amount is
adjusted effective January 1 of each year
by any annual percentage increase in
the Consumer Price Index for Urban
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Federal Register / Vol. 81, No. 150 / Thursday, August 4, 2016 / Proposed Rules
Wage Earners and Clerical Workers
(CPI–W) that was in effect on the
preceding June 1. Comment 43(b)(2)–3
will be amended to provide the
threshold amount for the upcoming year
after the annual percentage change in
the CPI–W that was in effect on June 1
becomes available. Any increase in the
threshold amount will be rounded to the
nearest $100 increment. For example, if
the annual percentage increase in the
CPI–W would result in a $950 increase
in the threshold amount, the threshold
amount will be increased by $1,000.
However, if the annual percentage
increase in the CPI–W would result in
a $949 increase in the threshold
amount, the threshold amount will be
increased by $900.
2. No increase in the CPI–W. If the
CPI–W in effect on June 1 does not
increase from the CPI–W in effect on
June 1 of the previous year, the
threshold amount effective the
following January 1 through December
31 will not change from the previous
year. When this occurs, for the years
that follow, the threshold is calculated
based on the annual percentage change
in the CPI–W applied to the dollar
amount that would have resulted if
decreases and any subsequent increases
in the CPI–W had been taken into
account.
i. Net increases. If the resulting
amount is greater than the current
threshold, then the threshold effective
January 1 the following year will
increase accordingly.
ii. Net decreases. If the resulting
amount calculated is equal to or less
than the current threshold, then the
threshold effective January 1 the
following year will not change, but
future increases will be calculated based
on the amount that would have resulted.
3. Threshold. For purposes of
§ 226.43(b)(2), the threshold amount in
effect during a particular period is the
amount stated below for that period.
i. From January 18, 2014, through
December 31, 2014, the threshold
amount is $25,000.
ii. From January 1, 2015, through
December 31, 2015, the threshold
amount is $25,500.
iii. From January 1, 2016 through
December 31, 2016, the threshold
amount is $25,500.
4. Qualifying for exemption—in
general. A transaction is exempt under
§ 226.43(b)(2) if the creditor makes an
extension of credit at consummation
that is equal to or below the threshold
amount in effect at the time of
consummation.
5. Qualifying for exemption—
subsequent changes. A transaction does
not meet the condition for an exemption
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14:52 Aug 03, 2016
Jkt 238001
under § 226.43(b)(2) merely because it is
used to satisfy and replace an existing
exempt loan, unless the amount of the
new extension of credit is equal to or
less than the applicable threshold
amount. For example, assume a closedend loan that qualified for a
§ 226.43(b)(2) exemption at
consummation in year one is refinanced
in year ten and that the new loan
amount is greater than the threshold
amount in effect in year ten. In these
circumstances, the creditor must
comply with all of the applicable
requirements of § 226.43 with respect to
the year ten transaction if the original
loan is satisfied and replaced by the
new loan, unless another exemption
from the requirements of § 226.43
applies. See § 226.43(b) and (d)(7).
*
*
*
*
*
Bureau of Consumer Financial
Protection
Authority and Issuance
For the reasons set forth in the
preamble, the Bureau proposes to
amend Regulation Z, 12 CFR part 1026,
as set forth below:
PART 1026—TRUTH IN LENDING
(REGULATION Z)
5. 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.
6. In Supplement I to part 1026, under
Section 1026.35—Requirements for
Higher-Priced Mortgage Loans, under
paragraph 35(c)(2)(ii), paragraphs 1
through 3 are revised, and paragraphs 4
and 5 are added, 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(c) Appraisals
*
*
*
*
*
35(c)(2) Exemptions
*
*
*
*
*
Paragraph 35(c)(2)(ii)
1. Threshold amount. For purposes of
§ 1026.35(c)(2)(ii), the threshold amount
in effect during a particular period is the
amount stated in comment 35(c)(2)(ii)–
3 for that period. The threshold amount
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Sfmt 4702
51399
is adjusted effective January 1 of each
year by any annual percentage increase
in the Consumer Price Index for Urban
Wage Earners and Clerical Workers
(CPI–W) that was in effect on the
preceding June 1. Comment 35(c)(2)(ii)–
3 will be amended to provide the
threshold amount for the upcoming year
after the annual percentage change in
the CPI–W that was in effect on June 1
becomes available. Any increase in the
threshold amount will be rounded to the
nearest $100 increment. For example, if
the annual percentage increase in the
CPI–W would result in a $950 increase
in the threshold amount, the threshold
amount will be increased by $1,000.
However, if the annual percentage
increase in the CPI–W would result in
a $949 increase in the threshold
amount, the threshold amount will be
increased by $900.
2. No increase in the CPI–W. If the
CPI–W in effect on June 1 does not
increase from the CPI–W in effect on
June 1 of the previous year, the
threshold amount effective the
following January 1 through December
31 will not change from the previous
year. When this occurs, for the years
that follow, the threshold is calculated
based on the annual percentage change
in the CPI–W applied to the dollar
amount that would have resulted if
decreases and any subsequent increases
in the CPI–W had been taken into
account.
i. Net increases. If the resulting
amount is greater than the current
threshold, then the threshold effective
January 1 the following year will
increase accordingly.
ii. Net decreases. If the resulting
amount calculated is equal to or less
than the current threshold, then the
threshold effective January 1 the
following year will not change, but
future increases will be calculated based
on the amount that would have resulted.
3. Threshold. For purposes of
§ 1026.35(c)(2)(ii), the threshold amount
in effect during a particular period is the
amount stated below for that period.
i. From January 18, 2014, through
December 31, 2014, the threshold
amount is $25,000.
ii. From January 1, 2015, through
December 31, 2015, the threshold
amount is $25,500.
iii. From January 1, 2016 through
December 31, 2016, the threshold
amount is $25,500.
4. Qualifying for exemption—in
general. A transaction is exempt under
§ 1026.35(c)(2)(ii) if the creditor makes
an extension of credit at consummation
that is equal to or below the threshold
amount in effect at the time of
consummation.
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Federal Register / Vol. 81, No. 150 / Thursday, August 4, 2016 / Proposed Rules
5. Qualifying for exemption—
subsequent changes. A transaction does
not meet the condition for an exemption
under § 1026.35(c)(2)(ii) merely because
it is used to satisfy and replace an
existing exempt loan, unless the amount
of the new extension of credit is equal
to or less than the applicable threshold
amount. For example, assume a closedend loan that qualified for a
§ 1026.35(c)(2)(ii) exemption at
consummation in year one is refinanced
in year ten and that the new loan
amount is greater than the threshold
amount in effect in year ten. In these
circumstances, the creditor must
comply with all of the applicable
requirements of § 1026.35(c) with
respect to the year ten transaction if the
original loan is satisfied and replaced by
the new loan, unless another exemption
from the requirements of § 1026.35(c)
applies. See § 1026.35(c)(2) and
(c)(4)(vii).
*
*
*
*
*
Thomas J. Curry,
Comptroller of the Currency.
By order of the Board of Governors of the
Federal Reserve System, July 19, 2016.
Robert deV. Frierson,
Secretary of the Board.
Dated: July 13, 2016.
Richard Cordray,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2016–18058 Filed 8–3–16; 8:45 am]
BILLING CODE 4810–33–P; 6210–01–P; 4810–AM–P
FEDERAL RESERVE SYSTEM
12 CFR Part 213
[Docket No. R–1545]
RIN 7100 AE–56
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1013
[Docket No. CFPB–2016–0036]
Consumer Leasing (Regulation M)
Board of Governors of the
Federal Reserve System (Board); and
Bureau of Consumer Financial
Protection (Bureau).
ACTION: Proposed rule; official
interpretations.
rmajette on DSK2TPTVN1PROD with PROPOSALS
AGENCY:
The Board and the Bureau are
proposing to amend the official
interpretations and commentary for the
agencies’ regulations that implement the
Consumer Leasing Act (CLA). The
Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank
SUMMARY:
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Jkt 238001
Act) amended the CLA by requiring that
the dollar threshold for exempt
consumer credit transactions be
adjusted annually by the annual
percentage increase in the Consumer
Price Index for Urban Wage Earners and
Clerical Workers (CPI–W). If there is no
annual percentage increase in the CPI–
W, the Board and Bureau will not adjust
this exemption threshold from the prior
year. The proposal would memorialize
this as well as the agencies’ calculation
method for determining the adjustment
in years following a year in which there
is no annual percentage increase in the
CPI–W.
Because the Dodd-Frank Act also
requires similar adjustments in the
Truth in Lending Act’s threshold for
exempt consumer credit transactions,
the Board and the Bureau are proposing
similar amendments to the
commentaries to each of their respective
regulations implementing the Truth in
Lending Act elsewhere in the Federal
Register.
Comments must be received on
or before September 6, 2016.
ADDRESSES: Interested parties are
encouraged to submit written comments
jointly to the Board and the Bureau.
Commenters are encouraged to use the
title ‘‘Consumer Leasing (Regulation
M)’’ to facilitate the organization and
distribution of comments among the
agencies. Interested parties are invited
to submit written comments to:
Board: You may submit comments,
identified by Docket No. R–1545 or RIN
7100 AE–56, by any of the following
methods:
• Agency Web site: https://
www.federalreserve.gov. Follow the
instructions for submitting comments at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Email: regs.comments@
federalreserve.gov. Include the docket
number in the subject line of the
message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Robert deV. Frierson,
Secretary, Board of Governors of the
Federal Reserve System, 20th Street and
Constitution Avenue NW., Washington,
DC 20551.
All public comments will be made
available on the Board’s Web site at
https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical
reasons. Accordingly, comments will
not be edited to remove any identifying
or contact information. Public
DATES:
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comments may also be viewed
electronically or in paper in Room MP–
500 of the Board’s Martin Building (20th
and C Streets NW.,) between 9:00 a.m.
and 5:00 p.m. on weekdays.
Bureau: You may submit comments,
identified by Docket No. CFPB–2016–
0036 by any of the following methods:
• Email: FederalRegisterComments@
cfpb.gov. Include Docket No. CFPB–
2016–0036 in the subject line of the
email.
• Electronic: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Mail: Monica Jackson, Office of the
Executive Secretary, Consumer
Financial Protection Bureau, 1700 G
Street NW., Washington, DC 20552.
• Hand Delivery/Courier: Monica
Jackson, Office of the Executive
Secretary, Consumer Financial
Protection Bureau, 1275 First Street NE.,
Washington, DC 20002.
Instructions: All submissions should
include the agency name and docket
number or Regulatory Information
Number (RIN) for this rulemaking.
Because paper mail in the Washington,
DC area and at the Bureau is subject to
delay, commenters are encouraged to
submit comments electronically. In
general, all comments received will be
posted without change to https://
www.regulations.gov. In addition,
comments will be available for public
inspection and copying at 1275 First
Street NE., Washington, DC 20002, on
official business days between the hours
of 10 a.m. and 5 p.m. eastern time. You
can make an appointment to inspect the
documents by telephoning (202) 435–
7275.
All comments, including attachments
and other supporting materials, will
become part of the public record and
subject to public disclosure. Sensitive
personal information, such as account
numbers or Social Security numbers,
should not be included. Comments will
not be edited to remove any identifying
or contact information.
FOR FURTHER INFORMATION CONTACT:
Board: Vivian W. Wong, Senior
Counsel, Division of Consumer and
Community Affairs, Board of Governors
of the Federal Reserve System, at (202)
452–3667; for users of
Telecommunications Device for the Deaf
(TDD) only, contact (202) 263–4869.
Bureau: Shaakira Gold-Ramirez,
Paralegal Specialist, Jaclyn Maier,
Counsel, Office of Regulations,
Consumer Financial Protection Bureau,
at (202) 435–7700.
SUPPLEMENTARY INFORMATION:
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[Federal Register Volume 81, Number 150 (Thursday, August 4, 2016)]
[Proposed Rules]
[Pages 51394-51400]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18058]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 34
[Docket No. OCC-2015-0021]
RIN 1557-AD99
FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Docket No. R-1443]
RIN 7100-AD 90
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1026
[Docket No. CFPB-2016-0035]
RIN 3170-AA11
Appraisals for Higher-Priced Mortgage Loans Exemption Threshold
AGENCY: Board of Governors of the Federal Reserve System (Board);
Bureau of Consumer Financial Protection (Bureau); and Office of the
Comptroller of the Currency, Treasury (OCC).
ACTION: Proposed rule; request for public comment.
-----------------------------------------------------------------------
SUMMARY: The OCC, the Board and the Bureau are publishing proposed
rules amending the official interpretations for their regulations that
implement section 129H of the Truth in Lending Act (TILA). Section 129H
of TILA establishes special appraisal requirements for ``higher-risk
mortgages,'' termed ``higher-priced mortgage loans'' or ``HPMLs'' in
the agencies' regulations. The OCC, the Board, the Bureau, the Federal
Deposit Insurance Corporation (FDIC), the National Credit Union
Administration (NCUA) and the Federal Housing Finance Agency (FHFA)
(collectively, the Agencies) issued joint final rules implementing
these requirements, effective January 18, 2014. The Agencies' rules
exempted, among other loan types, transactions of $25,000 or less, and
required that this loan amount be adjusted annually based on any annual
percentage increase in the Consumer Price Index for Urban Wage Earners
and Clerical Workers (CPI-W). If there is no annual percentage increase
in the CPI-W, the OCC, the Board and the Bureau will not adjust this
exemption threshold from the prior year. The proposal would memorialize
this as well as the agencies' calculation method for determining the
adjustment in years following a year in which there is no annual
percentage increase in the CPI-W.
DATES: Comments must be received on or before September 6, 2016.
ADDRESSES: Interested parties are encouraged to submit written comments
jointly to the OCC, the Board, and the Bureau. Commenters are
encouraged to use the title ``Appraisals for Higher-Priced Mortgage
Loans'' to facilitate the organization and distribution of comments
among the agencies. Interested parties are invited to submit written
comments to:
OCC: Because paper mail in the Washington, DC area and at the OCC
is subject to delay, commenters are encouraged to submit comments by
the Federal eRulemaking Portal or email, if possible. Please use the
title ``Appraisals for Higher-Priced Mortgage Loans'' to facilitate the
organization and distribution of the comments. You may submit comments
by any of the following methods:
Federal eRulemaking Portal--``regulations.gov'': Go to
https://www.regulations.gov. Enter ``Docket ID OCC-2015-0021'' in the
Search box and click ``Search.'' Results can be filtered using the
filtering tools on the left side of the screen. Click on ``Comment
Now'' to submit public comments.
Click on the ``Help'' tab on the Regulations.gov home page
to get information on using Regulations.gov, including instructions for
submitting public comments.
Email: regs.comments@occ.treas.gov.
Mail: Legislative and Regulatory Activities Division, 400
7th Street SW., suite 3E-218, mail stop 9W-11, Washington, DC 20219.
Hand Delivery/Courier: 400 7th Street SW., suite 3E-218,
mail stop 9W-11, Washington, DC 20219.
Fax: (571) 465-4326.
Instructions: You must include ``OCC'' as the agency name and
``Docket ID OCC-2015-0021'' in your comment. In general, OCC will enter
all comments received into the docket and publish them on the
Regulations.gov Web site without change, including any business or
personal information that you provide such as name and address
information, email addresses, or phone numbers. Comments received,
including attachments and other supporting materials, are part of the
public record and subject to public disclosure. Do not enclose any
information in your comment or supporting materials that you consider
confidential or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this notice of proposed rulemaking by any of the following methods:
Viewing Comments Electronically: Go to https://www.regulations.gov. Enter ``Docket ID OCC-2015-0021'' in the Search
box and click ``Search.'' Comments can be filtered by Agency using the
filtering tools on the left side of the screen.
Click on the ``Help'' tab on the Regulations.gov home page
to get information on using Regulations.gov, including instructions for
viewing public comments, viewing other supporting and related
materials, and viewing the docket after the close of the comment
period.
Viewing Comments Personally: You may personally inspect
and photocopy comments at the OCC, 400 7th Street SW., Washington, DC.
For security reasons, the OCC requires that visitors make an
appointment to inspect comments. You may do so by calling (202) 649-
6700 or, for persons who are deaf or hard of hearing, TTY, (202) 649-
5597. Upon arrival, visitors will be required to present valid
government-issued photo identification and submit to security screening
in order to inspect and photocopy comments.
Docket: You may also view or request available background documents
and project summaries using the methods described above.
Board: You may submit comments, identified by Docket No. R-1443 or
RIN 7100 AD-90, by any of the following methods:
Agency Web site: https://www.federalreserve.gov. Follow the
instructions for submitting comments at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Email: regs.comments@federalreserve.gov. Include the
docket number in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Robert deV. Frierson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue NW.,
Washington, DC 20551.
[[Page 51395]]
All public comments will be made available on the Board's Web site at
https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical reasons. Accordingly, comments
will not be edited to remove any identifying or contact information.
Public comments may also be viewed electronically or in paper in Room
MP-500 of the Board's Martin Building (20th and C Streets NW.) between
9:00 a.m. and 5:00 p.m. on weekdays.
Bureau: You may submit comments, identified by Docket No. CFPB-
2016-0035 or RIN 3170-AA11, by any of the following methods:
Email: FederalRegisterComments@cfpb.gov. Include Docket
No. CFPB-2016-0035 or RIN 3170-AA11 in the subject line of the email.
Electronic: https://www.regulations.gov. Follow the
instructions for submitting comments.
Mail: Monica Jackson, Office of the Executive Secretary,
Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC
20552.
Hand Delivery/Courier: Monica Jackson, Office of the
Executive Secretary, Consumer Financial Protection Bureau, 1275 First
Street NE., Washington, DC 20002.
Instructions: All submissions should include the agency name and
docket number or Regulatory Information Number (RIN) for this
rulemaking. Because paper mail in the Washington, DC area and at the
Bureau is subject to delay, commenters are encouraged to submit
comments electronically. In general, all comments received will be
posted without change to https://www.regulations.gov. In addition,
comments will be available for public inspection and copying at 1275
First Street NE., Washington, DC 20002, on official business days
between the hours of 10 a.m. and 5 p.m. eastern time. You can make an
appointment to inspect the documents by telephoning (202) 435-7275.
All comments, including attachments and other supporting materials,
will become part of the public record and subject to public disclosure.
Sensitive personal information, such as account numbers or Social
Security numbers, should not be included. Comments will not be edited
to remove any identifying or contact information.
FOR FURTHER INFORMATION CONTACT: OCC: MaryAnn Nash, Counsel,
Legislative and Regulatory Affairs Division, (202) 649-6287; for
persons who are deaf and hard of hearing TTY, (202) 649-5597. Board:
Lorna M. Neill, Senior Counsel, Division of Consumer and Community
Affairs, Board of Governors of the Federal Reserve System, at (202)
452-3667; for users of Telecommunications Device for the Deaf (TDD)
only, contact (202) 263-4869.
Bureau: Shaakira Gold-Ramirez, Paralegal Specialist, Jaclyn Maier,
Counsel, Office of Regulations, Consumer Financial Protection Bureau,
at (202) 435-7700.
SUPPLEMENTARY INFORMATION:
I. Background
The Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 (Dodd-Frank Act) amended the Truth in Lending Act (TILA) to add
special appraisal requirements for ``higher-risk mortgages.'' \1\ In
January 2013, the Agencies issued a joint final rule implementing these
requirements and adopted the term ``higher-priced mortgage loan''
(HPML) instead of ``higher-risk mortgage'' (the January 2013 Final
Rule).\2\ In July 2013, the Agencies proposed additional exemptions
from the January 2013 Final Rule (the 2013 Supplemental Proposed
Rule).\3\ In December 2013, the Agencies issued a supplemental final
rule with additional exemptions from the January 2013 Final Rule (the
December 2013 Supplemental Final Rule).\4\ Among other exemptions, the
Agencies adopted an exemption from the new HPML appraisal rules for
transactions of $25,000 or less, to be adjusted annually for inflation.
---------------------------------------------------------------------------
\1\ Public Law 111-203 section 1471, 124 Stat. 1376 (2010),
codified at TILA section 129H, 15 U.S.C. 1639h.
\2\ 78 FR 10368 (Feb. 13, 2013).
\3\ 78 FR 48548 (Aug. 8, 2013).
\4\ 78 FR 78520 (Dec. 26, 2013).
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The Bureau's, the OCC's, and the Board's versions of the January
2013 Final Rule and December 2013 Supplemental Final Rule and
corresponding official interpretations are substantively identical. The
FDIC, NCUA, and FHFA adopted the Bureau's version of the regulations
under the January 2013 Final Rule and December 2013 Supplemental Final
Rule.\5\
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\5\ See NCUA: 12 CFR 722.3; FHFA: 12 CFR part 1222. Although the
FDIC adopted the Bureau's version of the regulation, the FDIC did
not issue its own regulation containing a cross-reference to the
Bureau's version. See 78 FR 10368, 10370 (Feb. 13, 2013).
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Section 34.203(b)(2) of subpart G of part 34 of the OCC's
regulations, Sec. 226.43(b)(2) of the Board's Regulation Z, and Sec.
1026.35(c)(2)(ii) of the Bureau's Regulation Z, and their accompanying
interpretations,\6\ provide that the exemption threshold for smaller
loans will be adjusted effective January 1 of each year based on any
annual percentage increase in the Consumer Price Index for Urban Wage
Earners and Clerical Workers (CPI-W) that was in effect on the
preceding June 1. Any increase in the threshold amount will be rounded
to the nearest $100 increment. For example, if the annual percentage
increase in the CPI-W would result in a $950 increase in the threshold
amount, the threshold amount will be increased by $1,000. However, if
the annual percentage increase in the CPI-W would result in a $949
increase in the threshold amount, the threshold amount will be
increased by $900. If there is no annual percentage increase in the
CPI-W, the OCC, the Board, and the Bureau will not adjust the threshold
amounts from the prior year.\7\
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\6\ See 12 CFR part 34, Appendix C to Subpart G, comment
203(b)(2)-1 (OCC); 12 CFR part 226, Supplement I, comment 43(b)(2)-1
(Board); and 12 CFR part 1026, Supplement I, comment 35(c)(2)(ii)-1
(Bureau).
\7\ See 78 FR 48548, 48565 (Aug. 8, 2013) (``Thus, under the
proposal, if the CPI-W decreases in an annual period, the percentage
increase would be zero, and the dollar amount threshold for the
exemption would not change.'').
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II. Commentary Revision
The OCC, the Board and the Bureau are proposing new commentary to
memorialize the calculation method used by the agencies each year to
adjust the exemption threshold. The new commentary is substantively
identical for Sec. 34.203(b)(2) of subpart G of part 34 of the OCC's
regulations, Sec. 226.43(b)(2) of the Board's Regulation Z, and Sec.
1026.35(c)(2)(ii) of the Bureau's Regulation Z. For ease of reference,
the ``Commentary Revision'' refers only to the section numbers of the
commentary that will published in the Bureau's Regulation Z at 12 CFR
part 1026, Supplement I.
Comment 35(c)(2)(ii)-1 to the Bureau's Regulation Z currently
provides the threshold amount in effect during a particular period and
details the rules the agencies use for rounding the threshold
calculation to the nearest $100 or $1,000 increment, as discussed above
in part I, ``Background.'' The OCC, the Board and the Bureau are
proposing to revise comment 35(c)(2)(ii)-1 by moving the text regarding
the threshold amount that is in effect during a particular period to a
new proposed comment 35(c)(2)(ii)-3. The discussion of how the agencies
round the threshold calculation would remain in comment 35(c)(2)(ii)-1.
Current comments 35(c)(2)(ii)-2 and 35(c)(2)(ii)-3 would be renumbered
as proposed comments 35(c)(2)(ii)-5 and 35(c)(2)(ii)-6, respectively.
[[Page 51396]]
As the Agencies have stated previously,\8\ if there is no annual
percentage increase in the CPI-W, the OCC, the Board, and the Bureau
will not adjust the exemption threshold from the prior year. This
position is consistent with the Board's and the Bureau's approach in
adjusting the coverage thresholds for the Consumer Leasing Act (CLA)
and TILA, based on Section 1100E(b) of the Dodd-Frank Act, which states
that the threshold must be adjusted by the ``annual percentage
increase'' in the CPI-W (emphasis added). The Board and the Bureau are
publishing similar amendments to the commentaries to each of their
respective regulations implementing the CLA (Regulation M) and TILA
(Regulation Z) elsewhere in the Federal Register.\9\
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\8\ See 78 FR 48548, 48565 (Aug. 8, 2013) and 80 FR 73943, 73944
(Nov. 27, 2015).
\9\ 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (``[A]n annual period
of deflation or no inflation would not require a change in the
threshold amount.'').
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For the HPML appraisal rule exemption for smaller loans, the OCC,
the Board, and the Bureau are proposing to memorialize this concept in
proposed comment 35(c)(2)(ii)-2, which would provide that if the CPI-W
in effect on June 1 does not increase from the CPI-W in effect on June
1 of the previous year, the threshold amount effective the following
January 1 through December 31 will not change from the previous year.
For example, if the threshold in effect from January 1, 2019, through
December 31, 2019, is $27,500 and the CPI-W in effect on June 1 of
2019, indicates a 1.1 percent decrease from the CPI-W in effect on June
1, 2018, the threshold in effect for January 1, 2020, through December
31, 2020, will remain $27,500.
Proposed comment 35(c)(2)(ii)-2 would further set forth the
calculation method the agencies would use in years following a year in
which the exemption threshold was not adjusted because there was no
increase in the CPI-W from the previous year. Specifically, as set
forth under proposed comment 35(c)(2)(ii)-2, for the years after a year
in which the threshold did not change because the CPI-W in effect on
June 1 decreased from the CPI-W in effect on June 1 of the previous
year, the threshold is calculated by applying the annual percentage
change in the CPI-W to the dollar amount that would have resulted if
the decreases and any subsequent increases in the CPI-W had been taken
into account. Proposed comment 35(c)(2)(ii)-2.i further states that, if
the resulting amount is greater than the current threshold, then the
threshold effective January 1 the following year will increase
accordingly.
For example, assume that the threshold in effect from January 1,
2019, through December 31, 2019, is $27,500 and that, due to a 1.1
percent decrease from the CPI-W in effect on June 1, 2018, to the CPI-W
in effect on June 1, 2019, the threshold in effect from January 1,
2020, through December 31, 2020, remains at $27,500. If, however, the
threshold had been adjusted downward to reflect the decrease in the
CPI-W over that time period, the threshold in effect from January 1,
2020, through December 31, 2020, would have been $27,200. Further
assume that the CPI-W in effect on June 1, 2020, increased by 1.6
percent from the CPI-W in effect on June 1, 2019. The calculation for
the threshold that will be in effect from January 1, 2021, through
December 31, 2021, is based on the impact of a 1.6 percent increase in
the CPI-W on $27,200, rather than $27,500, resulting in a 2021
threshold of $27,600.
Furthermore, comment 35(c)(2)(ii)-2.ii states that, if the
resulting amount calculated is equal to or less than the current
threshold, then the threshold effective January 1 the following year
will not change, but future increases will be calculated based on the
amount that would have resulted. To illustrate, assume in the example
above that the CPI-W in effect on June 1, 2020, increased by only 0.6
percent from the CPI-W in effect on June 1, 2019. The calculation for
the threshold that will be in effect from January 1, 2021, through
December 31, 2021, is based on the impact of a 0.6 percent increase in
the CPI-W on $27,200. The resulting amount is $27,400, which is lower
than $27,500, the threshold in effect from January 1, 2020, through
December 31, 2020. Therefore, the threshold in effect from January 1,
2021, through December 31, 2021, will remain $27,500. However, the
calculation for the threshold that will be in effect from January 1,
2022, through December 31, 2022, will apply the percentage change in
the CPI-W to $27,400, the amount that would have resulted based on the
0.6 percent change from the CPI-W in effect on June 1, 2019, to the
CPI-W in effect on June 1, 2020.
The agencies request comment on all aspects of the proposed rule.
III. Regulatory Analysis
Bureau's Dodd-Frank Act Section 1022(b)(2) Analysis
In developing this proposal, the Bureau has considered potential
benefits, costs, and impacts.\10\ In addition, the Bureau has
consulted, or offered to consult with, the prudential regulators, the
Securities and Exchange Commission, the Department of Housing and Urban
Development, the Federal Housing Finance Agency, the Federal Trade
Commission, and the Department of the Treasury, including regarding
consistency with any prudential, market, or systemic objectives
administered by such agencies.
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\10\ Specifically, section 1022(b)(2)(A) calls for the Bureau to
consider the potential benefits and costs of a regulation to
consumers and covered persons, 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 Act; and
the impact on consumers in rural areas.
---------------------------------------------------------------------------
The Bureau has chosen to evaluate the benefits, costs and impacts
of the proposed commentary against the current state of the world,
which takes into account the current regulatory regime. The Bureau is
not aware of any significant benefits or costs to consumers or covered
persons associated with the proposal relative to the baseline. The OCC,
the Board, and the Bureau previously stated that if there is no annual
percentage increase in the CPI-W, then the agencies will not adjust the
exemption threshold from the prior year.\11\ The proposal memorializes
this in official commentary. The proposal also clarifies how the
threshold would be calculated for years after a year in which the
threshold did not change. The Bureau believes that this clarification
memorializes the method that the Bureau would be expected to use: This
method holds the threshold fixed until a notional threshold calculated
using the Bureau's methodology, but taking into account both decreases
and increases in the CPI-W, exceeds the actual threshold. The Bureau
requests comment on this point. Thus, the Bureau believes that the
proposed rule does not change the regulatory regime relative to the
baseline and creates no significant benefits, costs, or impacts.
---------------------------------------------------------------------------
\11\ 78 FR 48547, 48565 (Aug. 8, 2013) and 80 FR 73943, 73944
(Nov. 27, 2015).
---------------------------------------------------------------------------
The proposed rule will have no unique impact on depository
institutions or credit unions with $10 billion or less in assets as
described in section 1026(a) of the Dodd-Frank Act or on rural
consumers. The Bureau does not expect this final rule to affect
consumers' access to credit.
Regulatory Flexibility Act
OCC: The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (RFA)
requires an agency, in connection with a proposed
[[Page 51397]]
rule, to prepare an Initial Regulatory Flexibility Analysis describing
the impact of the proposed rule on small entities (defined by the Small
Business Administration for purposes of the RFA to include banking
entities with total assets of $550 million or less) or to certify that
the proposed rule would not have a significant economic impact on a
substantial number of small entities.
As explained in the Commentary Revision section of the preamble,
this proposed rule memorializes the calculation method used by the OCC,
the Board, and the Bureau each year to adjust the threshold for
exemption from the special appraisal requirements for HPMLs and
clarifies the agencies' calculation method for determining the
adjustment in the years following a year in which there is no annual
percentage increase in the CPI-W. The economic impact of this proposed
rule on national banks and Federal savings associations, regardless of
size, is not expected to be significant. Accordingly, the OCC certifies
that the proposed rule would not have a significant economic impact on
a substantial number of OCC-supervised small entities.
Board: The Regulatory Flexibility Act (RFA) requires an agency to
publish an initial regulatory flexibility analysis with a proposed rule
or certify that the proposed rule will not have a significant economic
impact on a substantial number of small entities.\12\ Based on its
analysis, and for the reasons stated below, the Board believes that the
rule will not have a significant economic impact on a substantial
number of small entities. Nevertheless, the Board is publishing an
initial regulatory flexibility analysis and requests public comment on
all aspects of its analysis. The Board will, if necessary, conduct a
final regulatory flexibility analysis after considering the comments
received during the public comment period.
---------------------------------------------------------------------------
\12\ See 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------
1. Statement of the need for, and objectives of, the proposed rule.
The proposed rule would memorialize the calculation method used by the
Board each year to adjust the exemption threshold in accordance with
Regulation Z, 12 CFR 226.43(b)(2).
2. Small entities affected by the proposed rule. The Board invites
comment on the effect of the proposed rule on small entities. For
purposes of the RFA, the Small Business Administration defines small
entities to include banking entities with total assets of $550 million
or less. Of Board supervised institutions with an asset size of $550
million or less as of March 2016, 223 reported making 5,135 higher-
priced mortgage loans in 2015.\13\
---------------------------------------------------------------------------
\13\ Board supervised institutions include State Member Banks,
uninsured state branches and agencies of foreign banks. The number
of institutions making higher-priced mortgage loans and the number
of higher-priced mortgage loans is based on data reported pursuant
to the Home Mortgage Disclosure Act (HMDA), 12 U.S.C. 2801 et seq.
---------------------------------------------------------------------------
3. Recordkeeping, reporting, and compliance requirements. The
proposed rule would not impose any recordkeeping, reporting, or
compliance requirements.
4. Other Federal rules. The Board has not identified any likely
duplication, overlap and/or potential conflict between the proposed
rule and any Federal rule.
5. Significant alternatives to the proposed revisions. The Board
solicits comment on any significant alternatives that would reduce the
regulatory burden on small entities associated with this proposed rule.
Bureau: The 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.\14\ These analyses must ``describe the impact
of the proposed rule on small entities''.\15\ 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.\16\ 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.\17\
---------------------------------------------------------------------------
\14\ 5 U.S.C. 601 et seq.
\15\ Id. at 603(a). For purposes of assessing the impacts of the
proposed rule on small entities, ``small entities'' is defined in
the RFA to include small businesses, small not-for-profit
organizations, and small government jurisdictions. Id. at 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. Id. at 601(3). A ``small organization'' is any ``not-for-
profit enterprise which is independently owned and operated and is
not dominant in its field.'' Id. at 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. Id. at 601(5).
\16\ Id. at 605(b).
\17\ Id. at 609.
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An IRFA is not required for this proposal because if adopted it
would not have a significant economic impact on a substantial number of
small entities. As discussed in the Bureau's Section 1022(b)(2)
Analysis above, this proposal does not introduce costs or benefits to
covered persons because the proposal seeks only to clarify the method
of threshold adjustment which has already been established in previous
Agency rules. Therefore this proposed rule would not have a significant
impact on small entities.
Certification
Accordingly, the Bureau Director, by signing below, certifies that
this proposal, if adopted, would not have a significant economic impact
on a substantial number of small entities.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995,\18\ the
agencies reviewed this proposed rule. No collections of information
pursuant to the Paperwork Reduction Act are contained in the proposed
rule.
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\18\ 44 U.S.C. 3506; 5 CFR 1320.
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Unfunded Mandates Reform Act
The OCC has analyzed the notice of proposed rulemaking under the
factors set forth in the Unfunded Mandates Reform Act of 1995 (UMRA) (2
U.S.C. 1532). Under this analysis, the OCC considered whether the
proposed rule includes a Federal mandate that may result in the
expenditure by State, local, and Tribal governments, in the aggregate,
or by the private sector, of $100 million or more in any one year
(adjusted annually for inflation).
The proposed rule memorializes the calculation method used by the
OCC, the Board, and the Bureau each year to adjust the threshold for
exemption from the special appraisal requirements for HPMLs and
clarifies the agencies' calculation method for determining the
adjustment in the years following a year in which there is no annual
percentage increase in the CPI-W. Because the proposed rule is designed
to clarify existing rules, and does not introduce any new requirements,
the OCC has determined that it would not result in expenditures by
State, local, and Tribal governments or by the private sector, of $100
million or more. Accordingly, the OCC has not prepared a written
statement to accompany its proposed rule.
List of Subjects
12 CFR Part 34
Appraisal, Appraiser, Banks, Banking, Consumer protection, Credit,
Mortgages, National banks, Reporting and recordkeeping requirements,
Savings associations, Truth in lending.
12 CFR Part 226
Advertising, Appraisal, Appraiser, Consumer protection, Credit,
Federal
[[Page 51398]]
Reserve System, Mortgages, Reporting and recordkeeping requirements,
Truth in lending.
12 CFR Part 1026
Advertising, Appraisal, Appraiser, Banking, Banks, Consumer
protection, Credit, Credit unions, Mortgages, National banks, Reporting
and recordkeeping requirements, Savings associations, Truth in lending.
Department of the Treasury
Office of the Comptroller of the Currency
Authority and Issuance
For the reasons set forth in the preamble, the OCC proposes to
amend 12 CFR part 34 as set forth below:
PART 34--REAL ESTATE LENDING AND APPRAISALS
0
1. The authority citation for part 34 is revised to read as follows:
Authority: 12 U.S.C. 1 et seq., 25b, 29, 93a, 371, 1463, 1464,
1465, 1701j-3, 1828(o), 3331 et seq., 5101 et seq., 5412(b)(2)(B)
and 15 U.S.C. 1639h.
Subpart G--Appraisals for Higher-Priced Mortgage Loans
0
2. In Appendix C to Subpart G, under Section 34.203--Appraisals for
Higher-Priced Mortgage Loans, under paragraph (b)(2):
0
i. Paragraph 1 is revised;
0
ii. Paragraphs 2 and 3 are re-designated as paragraphs 4 and 5,
respectively; and
0
iii. Paragraphs 2 and 3 are added.
The additions and revisions read as follows:
Appendix C to Subpart G--OCC Interpretations
* * * * *
Section 34.203--Appraisals for Higher-Priced Mortgage Loans
* * * * *
34.203(b) Exemptions
* * * * *
Paragraph 34.203(b)(2)
1. Threshold amount. For purposes of Sec. 34.203(b)(2), the
threshold amount in effect during a particular period is the amount
stated in comment 203(b)(2)-3 for that period. The threshold amount is
adjusted effective January 1 of each year by any annual percentage
increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W) that was in effect on the preceding June 1.
Comment 203(b)(2)-3 will be amended to provide the threshold amount for
the upcoming year after the annual percentage change in the CPI-W that
was in effect on June 1 becomes available. Any increase in the
threshold amount will be rounded to the nearest $100 increment. For
example, if the annual percentage increase in the CPI-W would result in
a $950 increase in the threshold amount, the threshold amount will be
increased by $1,000. However, if the annual percentage increase in the
CPI-W would result in a $949 increase in the threshold amount, the
threshold amount will be increased by $900.
2. No increase in the CPI-W. If the CPI-W in effect on June 1 does
not increase from the CPI-W in effect on June 1 of the previous year,
the threshold amount effective the following January 1 through December
31 will not change from the previous year. When this occurs, for the
years that follow, the threshold is calculated based on the annual
percentage change in the CPI-W applied to the dollar amount that would
have resulted if decreases and any subsequent increases in the CPI-W
had been taken into account.
i. Net increases. If the resulting amount is greater than the
current threshold, then the threshold effective January 1 the following
year will increase accordingly.
ii. Net decreases. If the resulting amount calculated is equal to
or less than the current threshold, then the threshold effective
January 1 the following year will not change, but future increases will
be calculated based on the amount that would have resulted.
3. Threshold. For purposes of Sec. 34.203(b)(2), the threshold
amount in effect during a particular period is the amount stated below
for that period.
i. From January 18, 2014, through December 31, 2014, the threshold
amount is $25,000.
ii. From January 1, 2015, through December 31, 2015, the threshold
amount is $25,500.
iii. From January 1, 2016 through December 31, 2016, the threshold
amount is $25,500.
4. Qualifying for exemption--in general. A transaction is exempt
under Sec. 34.203(b)(2) if the creditor makes an extension of credit
at consummation that is equal to or below the threshold amount in
effect at the time of consummation.
5. Qualifying for exemption--subsequent changes. A transaction does
not meet the condition for an exemption under Sec. 34.203(b)(2) merely
because it is used to satisfy and replace an existing exempt loan,
unless the amount of the new extension of credit is equal to or less
than the applicable threshold amount. For example, assume a closed-end
loan that qualified for a Sec. 34.203(b)(2) exemption at consummation
in year one is refinanced in year ten and that the new loan amount is
greater than the threshold amount in effect in year ten. In these
circumstances, the creditor must comply with all of the applicable
requirements of Sec. 34.203 with respect to the year ten transaction
if the original loan is satisfied and replaced by the new loan, unless
another exemption from the requirements of Sec. 34.203 applies. See
Sec. 34.203(b) and (d)(7).
* * * * *
Board of Governors of the Federal Reserve System
Authority and Issuance
For the reasons set forth in the preamble, the Board proposes to
amend Regulation Z, 12 CFR part 226, as set forth below:
PART 226--TRUTH IN LENDING (REGULATION Z)
0
3. The authority citation for part 226 continues to read as follows:
Authority: 12 U.S.C. 3806; 15 U.S.C. 1604, 1637(c)(5), 1639(l),
and 1639h; Pub. L. 111-24, section 2, 123 Stat. 1734; Pub. L. 111-
203, 124 Stat. 1376.
0
4. In Supplement I to part 226, under Section 226.43--Appraisals for
Higher-Risk Mortgage Loans, under paragraph 43(b)(2), paragraph 1 is
revised, paragraphs 2 and 3 are re-numbered paragraphs 4 and 5,
respectively, and new paragraphs 2 and 3 are added, to read as follows:
Supplement I to Part 226--Official Staff Interpretations
* * * * *
Subpart E--Special Rules for Certain Home Mortgage Transactions
* * * * *
Section 226.43--Appraisals for Higher-Risk Mortgage Loans
* * * * *
43(b) Exemptions
* * * * *
Paragraph 43(b)(2)
1. Threshold amount. For purposes of Sec. 226.43(b)(2), the
threshold amount in effect during a particular period is the amount
stated in comment 43(b)(2)-3 for that period. The threshold amount is
adjusted effective January 1 of each year by any annual percentage
increase in the Consumer Price Index for Urban
[[Page 51399]]
Wage Earners and Clerical Workers (CPI-W) that was in effect on the
preceding June 1. Comment 43(b)(2)-3 will be amended to provide the
threshold amount for the upcoming year after the annual percentage
change in the CPI-W that was in effect on June 1 becomes available. Any
increase in the threshold amount will be rounded to the nearest $100
increment. For example, if the annual percentage increase in the CPI-W
would result in a $950 increase in the threshold amount, the threshold
amount will be increased by $1,000. However, if the annual percentage
increase in the CPI-W would result in a $949 increase in the threshold
amount, the threshold amount will be increased by $900.
2. No increase in the CPI-W. If the CPI-W in effect on June 1 does
not increase from the CPI-W in effect on June 1 of the previous year,
the threshold amount effective the following January 1 through December
31 will not change from the previous year. When this occurs, for the
years that follow, the threshold is calculated based on the annual
percentage change in the CPI-W applied to the dollar amount that would
have resulted if decreases and any subsequent increases in the CPI-W
had been taken into account.
i. Net increases. If the resulting amount is greater than the
current threshold, then the threshold effective January 1 the following
year will increase accordingly.
ii. Net decreases. If the resulting amount calculated is equal to
or less than the current threshold, then the threshold effective
January 1 the following year will not change, but future increases will
be calculated based on the amount that would have resulted.
3. Threshold. For purposes of Sec. 226.43(b)(2), the threshold
amount in effect during a particular period is the amount stated below
for that period.
i. From January 18, 2014, through December 31, 2014, the threshold
amount is $25,000.
ii. From January 1, 2015, through December 31, 2015, the threshold
amount is $25,500.
iii. From January 1, 2016 through December 31, 2016, the threshold
amount is $25,500.
4. Qualifying for exemption--in general. A transaction is exempt
under Sec. 226.43(b)(2) if the creditor makes an extension of credit
at consummation that is equal to or below the threshold amount in
effect at the time of consummation.
5. Qualifying for exemption--subsequent changes. A transaction does
not meet the condition for an exemption under Sec. 226.43(b)(2) merely
because it is used to satisfy and replace an existing exempt loan,
unless the amount of the new extension of credit is equal to or less
than the applicable threshold amount. For example, assume a closed-end
loan that qualified for a Sec. 226.43(b)(2) exemption at consummation
in year one is refinanced in year ten and that the new loan amount is
greater than the threshold amount in effect in year ten. In these
circumstances, the creditor must comply with all of the applicable
requirements of Sec. 226.43 with respect to the year ten transaction
if the original loan is satisfied and replaced by the new loan, unless
another exemption from the requirements of Sec. 226.43 applies. See
Sec. 226.43(b) and (d)(7).
* * * * *
Bureau of Consumer Financial Protection
Authority and Issuance
For the reasons set forth in the preamble, the Bureau proposes to
amend Regulation Z, 12 CFR part 1026, as set forth below:
PART 1026--TRUTH IN LENDING (REGULATION Z)
0
5. 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
6. In Supplement I to part 1026, under Section 1026.35--Requirements
for Higher-Priced Mortgage Loans, under paragraph 35(c)(2)(ii),
paragraphs 1 through 3 are revised, and paragraphs 4 and 5 are added,
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(c) Appraisals
* * * * *
35(c)(2) Exemptions
* * * * *
Paragraph 35(c)(2)(ii)
1. Threshold amount. For purposes of Sec. 1026.35(c)(2)(ii), the
threshold amount in effect during a particular period is the amount
stated in comment 35(c)(2)(ii)-3 for that period. The threshold amount
is adjusted effective January 1 of each year by any annual percentage
increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W) that was in effect on the preceding June 1.
Comment 35(c)(2)(ii)-3 will be amended to provide the threshold amount
for the upcoming year after the annual percentage change in the CPI-W
that was in effect on June 1 becomes available. Any increase in the
threshold amount will be rounded to the nearest $100 increment. For
example, if the annual percentage increase in the CPI-W would result in
a $950 increase in the threshold amount, the threshold amount will be
increased by $1,000. However, if the annual percentage increase in the
CPI-W would result in a $949 increase in the threshold amount, the
threshold amount will be increased by $900.
2. No increase in the CPI-W. If the CPI-W in effect on June 1 does
not increase from the CPI-W in effect on June 1 of the previous year,
the threshold amount effective the following January 1 through December
31 will not change from the previous year. When this occurs, for the
years that follow, the threshold is calculated based on the annual
percentage change in the CPI-W applied to the dollar amount that would
have resulted if decreases and any subsequent increases in the CPI-W
had been taken into account.
i. Net increases. If the resulting amount is greater than the
current threshold, then the threshold effective January 1 the following
year will increase accordingly.
ii. Net decreases. If the resulting amount calculated is equal to
or less than the current threshold, then the threshold effective
January 1 the following year will not change, but future increases will
be calculated based on the amount that would have resulted.
3. Threshold. For purposes of Sec. 1026.35(c)(2)(ii), the
threshold amount in effect during a particular period is the amount
stated below for that period.
i. From January 18, 2014, through December 31, 2014, the threshold
amount is $25,000.
ii. From January 1, 2015, through December 31, 2015, the threshold
amount is $25,500.
iii. From January 1, 2016 through December 31, 2016, the threshold
amount is $25,500.
4. Qualifying for exemption--in general. A transaction is exempt
under Sec. 1026.35(c)(2)(ii) if the creditor makes an extension of
credit at consummation that is equal to or below the threshold amount
in effect at the time of consummation.
[[Page 51400]]
5. Qualifying for exemption--subsequent changes. A transaction does
not meet the condition for an exemption under Sec. 1026.35(c)(2)(ii)
merely because it is used to satisfy and replace an existing exempt
loan, unless the amount of the new extension of credit is equal to or
less than the applicable threshold amount. For example, assume a
closed-end loan that qualified for a Sec. 1026.35(c)(2)(ii) exemption
at consummation in year one is refinanced in year ten and that the new
loan amount is greater than the threshold amount in effect in year ten.
In these circumstances, the creditor must comply with all of the
applicable requirements of Sec. 1026.35(c) with respect to the year
ten transaction if the original loan is satisfied and replaced by the
new loan, unless another exemption from the requirements of Sec.
1026.35(c) applies. See Sec. 1026.35(c)(2) and (c)(4)(vii).
* * * * *
Thomas J. Curry,
Comptroller of the Currency.
By order of the Board of Governors of the Federal Reserve
System, July 19, 2016.
Robert deV. Frierson,
Secretary of the Board.
Dated: July 13, 2016.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2016-18058 Filed 8-3-16; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 4810-AM-P
