Appraisals for Higher-Priced Mortgage Loans Exemption Threshold, 86250-86256 [2016-28699]
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second step rates on each one of the
regular wage schedules applicable in the
otherwise overlapped wage areas.
■ 3. Appendix C to subpart B is
amended by revising the wage area
listing for the New York, NY, and
Philadelphia, PA, wage areas to read as
follows:
Appendix C to Subpart B of Part 532—
Appropriated Fund Wage and Survey
Areas
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NEW YORK
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New York
Survey Area
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New Jersey:
Burlington (Excluding the Joint Base
McGuire-Dix-Lakehurst portion)
Camden
Gloucester
Pennsylvania:
Bucks
Chester
Delaware
Montgomery
Philadelphia
Area of Application. Survey area plus:
New Jersey:
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BILLING CODE 6325–39–P
DEPARTMENT OF THE TREASURY
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PENNSYLVANIA
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Philadelphia
Survey Area
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[FR Doc. 2016–28769 Filed 11–29–16; 8:45 am]
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New Jersey:
Bergen
Essex
Hudson
Middlesex
Morris
Passaic
Somerset
Union
New York:
Bronx
Kings
Nassau
New York
Orange
Queens
Suffolk
Westchester
Area of Application. Survey area plus:
New Jersey:
Burlington (Joint Base McGuire-DixLakehurst portion only)
Hunterdon
Monmouth
Ocean
Sussex
New York:
Dutchess
Putnam
Richmond
Rockland
Pennsylvania:
Pike
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Atlantic
Cape May
Cumberland
Mercer
Warren
Pennsylvania:
Carbon
Lehigh
Northampton
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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–AA68
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: Final rules, official
interpretations and commentary.
AGENCY:
The OCC, the Board, and the
Bureau are finalizing amendments to 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
SUMMARY:
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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 final rule will 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. Based on the CPI–W in effect as
of June 1, 2016, the exemption threshold
will remain at $25,500 through 2017.
DATES: This final rule is effective
January 1, 2017.
FOR FURTHER INFORMATION CONTACT:
OCC: MaryAnn Nash, Counsel,
Legislative and Regulatory Activities
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: 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
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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$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
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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II. Commentary Revision
On August 4, 2016, the OCC, the
Board and the Bureau published a
proposed rule in the Federal Register to
memorialize the calculation method
used by the agencies each year to adjust
the exemption threshold. See 81 FR
51394 (Aug. 4, 2016). The proposed
commentary stated that 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. The proposed
commentary further set forth the
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
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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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. As
the OCC, the Board and the Bureau
discussed in the proposal, the proposed
calculation method would ensure that
the values for the exemption threshold
keep pace with the CPI–W as
contemplated in the December 2013
Supplemental Final Rule.
The comment period closed on
September 6, 2016. In response to the
proposal, the OCC, the Board and the
Bureau received one comment from an
individual, one from a State bankers
association, and one from a community
bank. The individual supported the
proposal. The State bankers association
requested that the smaller dollar loan
exemption be raised to $50,000, and the
community bank commenter requested
an exemption from the HPML rules for
small institutions. Both of these
comments are beyond the scope of this
rulemaking.
The OCC, the Board, and the Bureau
are adopting the commentary revisions
as proposed, with some minor clarifying
amendments. These changes will be
effective on January 1, 2017. 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, this
‘‘Commentary Revision’’ discussion
refers only to the section numbers of the
commentary that will be 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
revising 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. Consistent with
the proposal, the discussion of how the
agencies round the threshold
calculation will remain in comment
35(c)(2)(ii)–1 of the final rule.
Additionally, current comments
35(c)(2)(ii)–2 and 35(c)(2)(ii)–3 are renumbered as comments 35(c)(2)(ii)–4
and 35(c)(2)(ii)–5, respectively.
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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).9 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 this issue of the Federal
Register.
For the HPML appraisal rule
exemption for smaller loans, the OCC,
the Board, and the Bureau are
memorializing this concept in comment
35(c)(2)(ii)–2, which provides 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.
In the final rule, comment 35(c)(2)(ii)–
2 further sets 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,
comment 35(c)(2)(ii)–2 provides that, 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,
after rounding, if the decreases and any
subsequent increases in the CPI–W had
been taken into account. Comment
35(c)(2)(ii)–2.i further states that, if the
resulting amount, after rounding, is
greater than the current threshold, then
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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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, after rounding. 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, after rounding, 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,
after rounding. 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, after
rounding, 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, after rounding, to
the CPI–W in effect on June 1, 2020.
III. 2017 Threshold
Based on the calculation method
detailed above, the exemption threshold
amount for 2017 remains at $25,500.
This is based on the CPI–W in effect on
June 1, 2016, which was reported on
May 17, 2016. The Bureau of Labor
Statistics publishes consumer-based
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indices monthly, but does not report a
CPI change on June 1; adjustments are
reported in the middle of the month.
The CPI–W is a subset of the CPI–U
index (based on all urban consumers)
and represents approximately 28
percent of the U.S. population. The CPI–
W reported on May 17, 2016, reflects a
0.8 percent increase in the CPI–W from
April 2015 to April 2016. Because the
CPI–W decreased by 0.8 percent from
April 2014 to April 2015, the OCC, the
Board and the Bureau are calculating
the threshold based on the amount that
would have resulted had this decrease
been taken into account, which is
$25,300. A 0.8 percent increase in the
CPI–W applied to $25,300 results in
$25,500, which is the same threshold
amount for 2016. Thus, the exemption
threshold amount that will be in effect
for 2017 remains at $25,500. The OCC,
the Board and the Bureau are revising
the commentaries to their respective
regulations to add new comments as
follows:
• Comment 203(b)(2)–3.iv to 12 CFR
part 34, appendix C to subpart G (OCC);
• Comment 43(b)(2)–3.iv to
supplement I of 12 CFR part 226
(Board); and
• Comment 35(c)(2)(ii)–3.iv in
supplement I of 12 CFR part 1026
(Bureau).
These new comments state that, from
January 1, 2017, through December 31,
2017, the threshold amount is $25,500.
These revisions are effective January 1,
2017.
IV. Regulatory Analysis
Administrative Procedure Act
Under the Administrative Procedure
Act, notice and opportunity for public
comment are not required if the OCC,
the Board and the Bureau find that
notice and public comment are
impracticable, unnecessary, or contrary
to the public interest.10 The 2017
threshold amount for exempt
transactions announced in this rule,
$25,500, is technical and applies the
calculation method set forth elsewhere
in this final rule, for which notice and
public comment were provided.11 For
these reasons, the OCC, the Board and
the Bureau have determined that
publishing a notice of proposed
rulemaking and providing opportunity
for public comment for purposes of the
2017 threshold adjustment are
unnecessary. Therefore, the
amendments regarding the 2017
threshold amount for exempt
transactions are adopted in final form.
10 5
U.S.C. 553(b)(B).
81 FR 51394 (Aug. 4, 2016).
11 See
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Bureau’s Dodd-Frank Act Section
1022(b)(2) Analysis
In developing the final rule, the
Bureau has considered potential
benefits, costs, and impacts.12 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 final
rule 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 final rule 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.13 The final rule memorializes
this in official commentary. The final
rule also clarifies how the threshold is
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, taking into
account both decreases and increases in
the CPI–W, exceeds the actual
threshold. The Bureau requested, but
did not receive, comment on this point.
Thus, the Bureau concludes that the
final rule will not change the regulatory
regime relative to the baseline and will
create no significant benefits, costs, or
impacts.
The final 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.
12 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.
13 78 FR 48547, 48565 (Aug. 8, 2013) and 80 FR
73943, 73944 (Nov. 27, 2015).
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Regulatory Flexibility Act
OCC: Pursuant to the Regulatory
Flexibility Act (RFA), an agency must
prepare a regulatory flexibility analysis
for all proposed and final rules that
describes the impact of the rule on small
entities.14 Under section 605(b) of the
RFA, this analysis is not required if the
head of the agency certifies that the rule
will not have a significant economic
impact on a substantial number of small
entities and publishes its certification
and a short explanatory statement in the
Federal Register along with its rule. The
OCC has concluded that the final rule
does not have a significant economic
impact on a substantial number of small
entities supervised by the OCC.
As explained in the Commentary
Revision section of the preamble, this
final 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 final rule on small
national banks and Federal savings
associations 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 small OCCsupervised entities. Therefore, pursuant
to section 605(b) of the RFA, the OCC
hereby certifies that this final rule will
not have a significant economic impact
on a substantial number of small
entities. Accordingly, a regulatory
flexibility analysis is not required.
Board: An initial regulatory flexibility
analysis (IRFA) was included in the
proposal in accordance with section 3(a)
of the Regulatory Flexibility Act (RFA),
5 U.S.C. 601 et seq. (RFA). In the IRFA,
the Board requested comments on any
approaches, other than the proposed
alternatives, that would reduce the
burden on small entities. The RFA
requires an agency to prepare a final
regulatory flexibility analysis (FRFA)
unless the agency certifies that the rule
will not, if promulgated, have a
significant economic impact on a
substantial number of small entities.15
In accordance with section 3(a) of the
RFA, the Board has reviewed the final
regulation. Based on its analysis, and for
the reasons stated below, the Board
believes that the rule will not have a
14 See
5 U.S.C. 601 et seq.
15 See 5 U.S.C. 601 et seq.
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significant economic impact on a
substantial number of small entities.
1. Statement of the need for, and
objectives of, the final rule. The final
rule memorializes 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). The final rule also adopts
the exemption threshold that will apply
from January 1, 2017, through December
31, 2017, based on the calculation
method memorialized in the final rule.
2. Summary of issues raised by
comments in response to the IFRA. The
Board did not receive any comments on
the IFRA.
3. Small entities affected by the final
rule. 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 2015.16
The Board does not believe that the final
rule will have a significant economic
impact on the entities that it affects.
4. Recordkeeping, reporting, and
compliance requirements. The final rule
would not impose any recordkeeping,
reporting, or compliance requirements.
5. Other Federal rules. The Board has
not identified any likely duplication,
overlap and/or potential conflict
between the final rule and any Federal
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.17 These analyses must
describe the impact of the proposed and
final rules on small entities.18 An IRFA
16 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.
17 5 U.S.C. 601 et seq.
18 Id. at 603(a) and 604(a). For purposes of
assessing the impacts of the 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).
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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.19
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.20
A FRFA is not required for this final
rule because it will 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 final rule
does not introduce costs or benefits to
covered persons because it seeks only to
clarify the method of threshold
adjustment which has already been
established in previous Agency rules.
Therefore this final rule will not have a
significant impact on small entities.
Certification
Accordingly, the Bureau Director, by
signing below, certifies that this final
rule will not have a significant
economic impact on a substantial
number of small entities.
Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995,21 the agencies
reviewed this final rule. No collections
of information pursuant to the
Paperwork Reduction Act are contained
in the final rule.
Unfunded Mandates Reform Act
The OCC has analyzed the final rule
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 final 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 final 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 final
rule is designed to clarify existing rules,
and does not introduce any new
requirements, the OCC has determined
19 Id.
at 605(b).
at 609.
21 44 U.S.C. 3506; 5 CFR part 1320.
20 Id.
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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 final 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
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 amends 12 CFR part
34 as set forth below:
PART 34—REAL ESTATE LENDING
AND APPRAISALS
1. The authority citation for part 34
continues 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, the entry for
Paragraph 34.203(b)(2) is revised to read
as follows:
■
Appendix C to Subpart G of Part 34—
OCC Interpretations
sradovich on DSK3GMQ082PROD with RULES
*
*
*
*
*
Section 34.203—Appraisals for HigherPriced Mortgage Loans
*
*
*
*
*
34.203(b) Exemptions
*
*
*
*
*
Paragraph 34.203(b)(2)
1. Threshold amount. For purposes of
§ 34.203(b)(2), the threshold amount in effect
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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, after rounding, if decreases and any
subsequent increases in the CPI–W had been
taken into account.
i. Net increases. If the resulting amount
calculated, after rounding, 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, after rounding, 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.
iv. From January 1, 2017, through
December 31, 2017, 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 less than the applicable
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Fmt 4700
Sfmt 4700
threshold amount. For example, assume a
closed-end 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 amends 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, the entry for
Paragraph 43(b)(2) is revised 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
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
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Federal Register / Vol. 81, No. 230 / Wednesday, November 30, 2016 / Rules and Regulations
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, after
rounding, if decreases and any
subsequent increases in the CPI–W had
been taken into account.
i. Net increases. If the resulting
amount calculated, after rounding, 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, after rounding, 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.
iv. From January 1, 2017, through
December 31, 2017, 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
under § 226.43(b)(2) merely because it is
used to satisfy and replace an existing
exempt loan, unless the amount of the
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16:13 Nov 29, 2016
Jkt 241001
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 amends
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, the entry
for Paragraph 35(c)(2)(ii) is revised to
read as follows:
■
Supplement I to Part 1026—Official
Interpretations
*
*
*
*
*
Subpart E—Special Rules for Certain
Home Mortgage Transactions
*
*
*
*
*
Section 1026.35—Requirements for
Higher-Priced Mortgage Loans
*
*
*
*
*
35(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
is adjusted effective January 1 of each
year by any annual percentage increase
in the Consumer Price Index for Urban
PO 00000
Frm 00007
Fmt 4700
Sfmt 4700
86255
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, after
rounding, if decreases and any
subsequent increases in the CPI–W had
been taken into account.
i. Net increases. If the resulting
amount calculated, after rounding, 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, after rounding, 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.
iv. From January 1, 2017, through
December 31, 2017, 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
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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 § 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).
*
*
*
*
*
Dated: November 22, 2016.
Thomas J. Curry,
Comptroller of the Currency.
By order of the Board of Governors of the
Federal Reserve System, November 21, 2016.
Robert deV. Frierson,
Secretary of the Board.
Dated: November 7, 2016.
Richard Cordray,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2016–28699 Filed 11–29–16; 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]
RIN 3170–AA66
Consumer Leasing (Regulation M)
Board of Governors of the
Federal Reserve System (Board); and
Bureau of Consumer Financial
Protection (Bureau).
ACTION: Final rules, official
interpretations and commentary.
sradovich on DSK3GMQ082PROD with RULES
AGENCY:
The Board and the Bureau are
finalizing amendments to the official
SUMMARY:
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16:13 Nov 29, 2016
Jkt 241001
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
Act) amended the CLA by requiring that
the dollar threshold for exempt
consumer leases 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 final rule
memorializes 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. Based on the CPI–W in effect as of
June 1, 2016, the exemption threshold
will remain at $54,600 through 2017.
The Dodd-Frank Act also requires
similar adjustments in the Truth in
Lending Act’s threshold for exempt
consumer credit transactions.
Accordingly, the Board and the Bureau
are adopting similar amendments to the
commentaries to each of their respective
regulations implementing the Truth in
Lending Act elsewhere in this issue of
the Federal Register.
DATES: This final rule is effective
January 1, 2017.
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: 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) increased the
threshold in the Consumer Leasing Act
(CLA) for exempt consumer leases, and
the threshold in the Truth in Lending
Act (TILA) for exempt consumer credit
transactions,1 from $25,000 to $50,000,
effective July 21, 2011.2 In addition, the
Dodd-Frank Act requires that, on and
1 Although consumer credit transactions above
the threshold are generally exempt, loans secured
by real property or by personal property used or
expected to be used as the principal dwelling of a
consumer and private education loans are covered
by TILA regardless of the loan amount. See 12 CFR
226.3(b)(1)(i) (Board) and 12 CFR 1026.3(b)(1)(i)
(Bureau).
2 Public Law 111–203, section 1100E, 124 Stat.
1376 (2010).
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Fmt 4700
Sfmt 4700
after December 31, 2011, these
thresholds be adjusted annually for
inflation by the annual percentage
increase in the Consumer Price Index
for Urban Wage Earners and Clerical
Workers (CPI–W), as published by the
Bureau of Labor Statistics. In April
2011, the Board issued a final rule
amending Regulation M (which
implements the CLA) consistent with
these provisions of the Dodd-Frank Act,
along with a similar final rule amending
Regulation Z (which implements TILA)
(collectively, the Board Final Threshold
Rules).3
Title X of the Dodd-Frank Act
transferred rulemaking authority for a
number of consumer financial
protection laws from the Board to the
Bureau, effective July 21, 2011. In
connection with this transfer of
rulemaking authority, the Bureau issued
its own Regulation M implementing the
CLA in an interim final rule, 12 CFR
part 1013 (Bureau Interim Final Rule).4
The Bureau Interim Final Rule
substantially duplicated the Board’s
Regulation M, including the revisions to
the threshold for exempt transactions
made by the Board in April 2011. In
April 2016, the Bureau adopted the
Bureau Interim Final Rule as final,
subject to intervening final rules
published by the Bureau.5 Although the
Bureau has the authority to issue rules
to implement the CLA for most entities,
the Board retains authority to issue rules
under the CLA for certain motor vehicle
dealers covered by section 1029(a) of the
Dodd-Frank Act, and the Board’s
Regulation M continues to apply to
those entities.6
3 76 FR 18349 (Apr. 4, 2011); 76 FR 18354 (Apr.
4, 2011).
4 76 FR 78500 (Dec. 19, 2011).
5 81 FR 25323 (April 28, 2016).
6 Section 1029(a) of the Dodd-Frank Act states:
‘‘Except as permitted in subsection (b), the Bureau
may not exercise any rulemaking, supervisory,
enforcement, or any other authority * * * over a
motor vehicle dealer that is predominantly engaged
in the sale and servicing of motor vehicles, the
leasing and servicing of motor vehicles, or both.’’
12 U.S.C. 5519(a). Section 1029(b) of the DoddFrank Act states: ‘‘Subsection (a) shall not apply to
any person, to the extent that such person (1)
provides consumers with any services related to
residential or commercial mortgages or selffinancing transactions involving real property; (2)
operates a line of business (A) that involves the
extension of retail credit or retail leases involving
motor vehicles; and (B) in which (i) the extension
of retail credit or retail leases are provided directly
to consumers; and (ii) the contract governing such
extension of retail credit or retail leases is not
routinely assigned to an unaffiliated third party
finance or leasing source; or (3) offers or provides
a consumer financial product or service not
involving or related to the sale, financing, leasing,
rental, repair, refurbishment, maintenance, or other
servicing of motor vehicles, motor vehicle parts, or
any related or ancillary product or service.’’ 12
U.S.C. 5519(b).
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]]>Agencies
[Federal Register Volume 81, Number 230 (Wednesday, November 30, 2016)]
[Rules and Regulations]
[Pages 86250-86256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28699]
=======================================================================
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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-AA68
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: Final rules, official interpretations and commentary.
-----------------------------------------------------------------------
SUMMARY: The OCC, the Board, and the Bureau are finalizing amendments
to 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 final rule will
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. Based on the CPI-W in
effect as of June 1, 2016, the exemption threshold will remain at
$25,500 through 2017.
DATES: This final rule is effective January 1, 2017.
FOR FURTHER INFORMATION CONTACT: OCC: MaryAnn Nash, Counsel,
Legislative and Regulatory Activities 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: 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
[[Page 86251]]
$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
On August 4, 2016, the OCC, the Board and the Bureau published a
proposed rule in the Federal Register to memorialize the calculation
method used by the agencies each year to adjust the exemption
threshold. See 81 FR 51394 (Aug. 4, 2016). The proposed commentary
stated that 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. The proposed commentary 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. As the OCC, the Board and
the Bureau discussed in the proposal, the proposed calculation method
would ensure that the values for the exemption threshold keep pace with
the CPI-W as contemplated in the December 2013 Supplemental Final Rule.
The comment period closed on September 6, 2016. In response to the
proposal, the OCC, the Board and the Bureau received one comment from
an individual, one from a State bankers association, and one from a
community bank. The individual supported the proposal. The State
bankers association requested that the smaller dollar loan exemption be
raised to $50,000, and the community bank commenter requested an
exemption from the HPML rules for small institutions. Both of these
comments are beyond the scope of this rulemaking.
The OCC, the Board, and the Bureau are adopting the commentary
revisions as proposed, with some minor clarifying amendments. These
changes will be effective on January 1, 2017. 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, this ``Commentary Revision'' discussion refers only to
the section numbers of the commentary that will be 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
revising 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. Consistent with the proposal, the
discussion of how the agencies round the threshold calculation will
remain in comment 35(c)(2)(ii)-1 of the final rule. Additionally,
current comments 35(c)(2)(ii)-2 and 35(c)(2)(ii)-3 are re-numbered as
comments 35(c)(2)(ii)-4 and 35(c)(2)(ii)-5, respectively.
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).\9\ 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 this issue of the Federal Register.
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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 memorializing this concept in comment
35(c)(2)(ii)-2, which provides 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.
In the final rule, comment 35(c)(2)(ii)-2 further sets 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, comment
35(c)(2)(ii)-2 provides that, 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, after rounding, if
the decreases and any subsequent increases in the CPI-W had been taken
into account. Comment 35(c)(2)(ii)-2.i further states that, if the
resulting amount, after rounding, is greater than the current
threshold, then
[[Page 86252]]
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, after
rounding. 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, after rounding, 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, after rounding. 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, after rounding, 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, after rounding, to the
CPI-W in effect on June 1, 2020.
III. 2017 Threshold
Based on the calculation method detailed above, the exemption
threshold amount for 2017 remains at $25,500. This is based on the CPI-
W in effect on June 1, 2016, which was reported on May 17, 2016. The
Bureau of Labor Statistics publishes consumer-based indices monthly,
but does not report a CPI change on June 1; adjustments are reported in
the middle of the month. The CPI-W is a subset of the CPI-U index
(based on all urban consumers) and represents approximately 28 percent
of the U.S. population. The CPI-W reported on May 17, 2016, reflects a
0.8 percent increase in the CPI-W from April 2015 to April 2016.
Because the CPI-W decreased by 0.8 percent from April 2014 to April
2015, the OCC, the Board and the Bureau are calculating the threshold
based on the amount that would have resulted had this decrease been
taken into account, which is $25,300. A 0.8 percent increase in the
CPI-W applied to $25,300 results in $25,500, which is the same
threshold amount for 2016. Thus, the exemption threshold amount that
will be in effect for 2017 remains at $25,500. The OCC, the Board and
the Bureau are revising the commentaries to their respective
regulations to add new comments as follows:
Comment 203(b)(2)-3.iv to 12 CFR part 34, appendix C to
subpart G (OCC);
Comment 43(b)(2)-3.iv to supplement I of 12 CFR part 226
(Board); and
Comment 35(c)(2)(ii)-3.iv in supplement I of 12 CFR part
1026 (Bureau).
These new comments state that, from January 1, 2017, through
December 31, 2017, the threshold amount is $25,500. These revisions are
effective January 1, 2017.
IV. Regulatory Analysis
Administrative Procedure Act
Under the Administrative Procedure Act, notice and opportunity for
public comment are not required if the OCC, the Board and the Bureau
find that notice and public comment are impracticable, unnecessary, or
contrary to the public interest.\10\ The 2017 threshold amount for
exempt transactions announced in this rule, $25,500, is technical and
applies the calculation method set forth elsewhere in this final rule,
for which notice and public comment were provided.\11\ For these
reasons, the OCC, the Board and the Bureau have determined that
publishing a notice of proposed rulemaking and providing opportunity
for public comment for purposes of the 2017 threshold adjustment are
unnecessary. Therefore, the amendments regarding the 2017 threshold
amount for exempt transactions are adopted in final form.
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\10\ 5 U.S.C. 553(b)(B).
\11\ See 81 FR 51394 (Aug. 4, 2016).
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Bureau's Dodd-Frank Act Section 1022(b)(2) Analysis
In developing the final rule, the Bureau has considered potential
benefits, costs, and impacts.\12\ 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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\12\ 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.
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The Bureau has chosen to evaluate the benefits, costs and impacts
of the final rule 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 final rule 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.\13\ The final rule
memorializes this in official commentary. The final rule also clarifies
how the threshold is 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, taking into account both decreases and
increases in the CPI-W, exceeds the actual threshold. The Bureau
requested, but did not receive, comment on this point. Thus, the Bureau
concludes that the final rule will not change the regulatory regime
relative to the baseline and will create no significant benefits,
costs, or impacts.
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\13\ 78 FR 48547, 48565 (Aug. 8, 2013) and 80 FR 73943, 73944
(Nov. 27, 2015).
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The final 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.
[[Page 86253]]
Regulatory Flexibility Act
OCC: Pursuant to the Regulatory Flexibility Act (RFA), an agency
must prepare a regulatory flexibility analysis for all proposed and
final rules that describes the impact of the rule on small
entities.\14\ Under section 605(b) of the RFA, this analysis is not
required if the head of the agency certifies that the rule will not
have a significant economic impact on a substantial number of small
entities and publishes its certification and a short explanatory
statement in the Federal Register along with its rule. The OCC has
concluded that the final rule does not have a significant economic
impact on a substantial number of small entities supervised by the OCC.
---------------------------------------------------------------------------
\14\ See 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------
As explained in the Commentary Revision section of the preamble,
this final 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 final
rule on small national banks and Federal savings associations 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 small OCC-supervised entities. Therefore,
pursuant to section 605(b) of the RFA, the OCC hereby certifies that
this final rule will not have a significant economic impact on a
substantial number of small entities. Accordingly, a regulatory
flexibility analysis is not required.
Board: An initial regulatory flexibility analysis (IRFA) was
included in the proposal in accordance with section 3(a) of the
Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq. (RFA). In the
IRFA, the Board requested comments on any approaches, other than the
proposed alternatives, that would reduce the burden on small entities.
The RFA requires an agency to prepare a final regulatory flexibility
analysis (FRFA) unless the agency certifies that the rule will not, if
promulgated, have a significant economic impact on a substantial number
of small entities.\15\ In accordance with section 3(a) of the RFA, the
Board has reviewed the final regulation. 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.
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\15\ See 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------
1. Statement of the need for, and objectives of, the final rule.
The final rule memorializes 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). The final rule also adopts the
exemption threshold that will apply from January 1, 2017, through
December 31, 2017, based on the calculation method memorialized in the
final rule.
2. Summary of issues raised by comments in response to the IFRA.
The Board did not receive any comments on the IFRA.
3. Small entities affected by the final rule. 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.\16\ The Board does not believe that the final rule will
have a significant economic impact on the entities that it affects.
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\16\ 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.
---------------------------------------------------------------------------
4. Recordkeeping, reporting, and compliance requirements. The final
rule would not impose any recordkeeping, reporting, or compliance
requirements.
5. Other Federal rules. The Board has not identified any likely
duplication, overlap and/or potential conflict between the final rule
and any Federal 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.\17\ These analyses must describe the impact of
the proposed and final rules on small entities.\18\ 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.\19\ 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.\20\
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\17\ 5 U.S.C. 601 et seq.
\18\ Id. at 603(a) and 604(a). For purposes of assessing the
impacts of the 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).
\19\ Id. at 605(b).
\20\ Id. at 609.
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A FRFA is not required for this final rule because it will 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 final rule does not introduce costs or benefits to covered
persons because it seeks only to clarify the method of threshold
adjustment which has already been established in previous Agency rules.
Therefore this final rule will not have a significant impact on small
entities.
Certification
Accordingly, the Bureau Director, by signing below, certifies that
this final rule will 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,\21\ the
agencies reviewed this final rule. No collections of information
pursuant to the Paperwork Reduction Act are contained in the final
rule.
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\21\ 44 U.S.C. 3506; 5 CFR part 1320.
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Unfunded Mandates Reform Act
The OCC has analyzed the final rule 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 final 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 final 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 final rule is designed to
clarify existing rules, and does not introduce any new requirements,
the OCC has determined
[[Page 86254]]
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 final 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 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 amends 12 CFR
part 34 as set forth below:
PART 34--REAL ESTATE LENDING AND APPRAISALS
0
1. The authority citation for part 34 continues 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, the entry for Paragraph 34.203(b)(2) is
revised to read as follows:
Appendix C to Subpart G of Part 34--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, after rounding, if decreases and
any subsequent increases in the CPI-W had been taken into account.
i. Net increases. If the resulting amount calculated, after
rounding, 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, after
rounding, 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.
iv. From January 1, 2017, through December 31, 2017, 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 amends
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, the entry for Paragraph 43(b)(2) is revised
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 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
[[Page 86255]]
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, after rounding, if decreases and any subsequent
increases in the CPI-W had been taken into account.
i. Net increases. If the resulting amount calculated, after
rounding, 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, after
rounding, 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.
iv. From January 1, 2017, through December 31, 2017, 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 amends
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, the entry for Paragraph 35(c)(2)(ii)
is revised to read as follows:
Supplement I to Part 1026--Official Interpretations
* * * * *
Subpart E--Special Rules for Certain Home Mortgage Transactions
* * * * *
Section 1026.35--Requirements for Higher-Priced Mortgage Loans
* * * * *
35(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, after rounding, if decreases and any subsequent
increases in the CPI-W had been taken into account.
i. Net increases. If the resulting amount calculated, after
rounding, 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, after
rounding, 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.
iv. From January 1, 2017, through December 31, 2017, 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
[[Page 86256]]
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. 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).
* * * * *
Dated: November 22, 2016.
Thomas J. Curry,
Comptroller of the Currency.
By order of the Board of Governors of the Federal Reserve
System, November 21, 2016.
Robert deV. Frierson,
Secretary of the Board.
Dated: November 7, 2016.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2016-28699 Filed 11-29-16; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 4810-AM-P
