Appraisals for Higher-Priced Mortgage Loans Exemption Threshold, 58013-58017 [2019-21559]

Download as PDF Federal Register / Vol. 84, No. 210 / Wednesday, October 30, 2019 / Rules and Regulations the OHA without prejudice, and the same basis for dismissal without prejudice exists upon refiling by the same petitioner. (b) Dismissal without prejudice. The dismissal of a petition without prejudice by the OHA terminates the OHA’s review of the petition but does not bar the petitioner from resubmitting the petition provided that the facts or circumstances leading to the dismissal have been resolved. In dismissing a petition without prejudice, the OHA may order that the petitioner may not resubmit the petition, or a substantially similar petition, for a period of time not to exceed 180 days. The OHA may dismiss a petition without prejudice if: (1) The petitioner fails to include any of the required elements of a petition set forth in § 1003.11 of this part; (2) The petitioner fails to provide notice as required by § 1003.12 of this part; (3) The petitioner fails to timely provide documents or information at the request of the OHA pursuant to § 1003.14 or § 1003.15 of this part; (4) The petition fails to state a claim upon which the OHA can grant relief; or (5) The OHA determines that there is insufficient information upon which to base a decision. § 1003.17 Standard of review. (a) The OHA will grant a petition that seeks an adjustment from a DOE rule, regulation or order under the authority of 42 U.S.C. 7194 only if it determines that doing so will alleviate or prevent serious hardship, gross inequity or unfair distribution of burdens. (b) Except as provided by program, statute, rule, regulation, or DOE delegation of authority, the OHA will grant any other petition filed under this part upon a showing that the DOE acted arbitrarily, capriciously, or in violation of a law, rule, regulation, or delegation with respect to the final disposition of DOE that is the subject of the petition. (c) Petitions shall be decided in a manner that is, to the extent possible, consistent with the disposition of previous petitions of the same kind. § 1003.18 Decision and Order. (a) Upon consideration of the petition and other relevant information received or obtained during the proceeding, the OHA will issue a Decision and Order granting or denying the petition and ordering relief as appropriate. The OHA will serve the Decision and Order on the parties to the proceeding and make it available to the public. (b) The Decision and Order will set forth its legal basis and the relevant facts, state whether it is a final agency VerDate Sep<11>2014 15:59 Oct 29, 2019 Jkt 250001 action of the DOE, and state what further review, if any, is available. (c) There is no administrative appeal of a Decision and Order, except as provided by federal statute. § 1003.19 Reconsideration. A participant in the proceeding may submit to the OHA a motion for reconsideration of a Decision and Order. The motion for reconsideration must be filed by the 20th day after the OHA makes the Decision and Order available to the public. The motion must include a statement of the grounds on which the movant believes reconsideration is warranted. Such grounds may include, but are not limited to, procedural, legal, or factual errors in the Decision and Order. A motion for reconsideration may be granted if the Director determines the Decision and Order contains an error that materially impacted the outcome of the proceeding. [FR Doc. 2019–23509 Filed 10–29–19; 8:45 am] BILLING CODE 6450–01–P DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 34 [Docket No. OCC–2019–0022] RIN 1557–AE68 58013 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. However, in years following a year in which the exemption threshold was not adjusted, the threshold is calculated by applying the annual percentage increase 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. Based on the CPI–W in effect as of June 1, 2019, the exemption threshold will increase from $26,700 to $27,200, effective January 1, 2020. This final rule is effective January 1, 2020. DATES: FEDERAL RESERVE SYSTEM FOR FURTHER INFORMATION CONTACT: 12 CFR Part 226 [Docket No. R–1678] RIN 7100–AF–61 BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1026 Appraisals for Higher-Priced Mortgage Loans Exemption Threshold Office of the Comptroller of the Currency, Treasury (OCC), Board of Governors of the Federal Reserve System (Board); and Bureau of Consumer Financial Protection (Bureau). 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 SUMMARY: PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 OCC: MaryAnn Nash, Counsel, Chief Counsel’s Office, (202) 649–6287; for persons who are deaf or 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: Kristen Phinnessee, Counsel, Office of Regulations, Bureau of Consumer Financial Protection, at (202) 435–7700. If you require this document in an alternative electronic format, please contact CFPB_Accessibility@ cfpb.gov. 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 E:\FR\FM\30OCR1.SGM 30OCR1 58014 Federal Register / Vol. 84, No. 210 / Wednesday, October 30, 2019 / Rules and Regulations mortgages.’’ 1 In January 2013, the Agencies issued a joint final rule implementing these requirements and adopted the term ‘‘higher-priced mortgage loan’’ (HPML) instead of ‘‘higher-risk mortgage’’ (the January 2013 Final Rule).2 In July 2013, the Agencies proposed additional exemptions from the January 2013 Final Rule (the 2013 Supplemental Proposed Rule).3 In December 2013, the Agencies issued a supplemental final rule with additional exemptions from the January 2013 Final Rule (the December 2013 Supplemental Final Rule).4 Among other exemptions, the Agencies adopted an exemption from the new HPML appraisal rules for transactions of $25,000 or less, to be adjusted annually for inflation. The OCC’s, the Board’s, and the Bureau’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 The OCC’s, Board’s, and Bureau’s regulations,6 and their accompanying interpretations,7 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– 1 Public Law 111–203, section 1471, 124 Stat. 1376, 2185–87 (2010), codified at TILA section 129H, 15 U.S.C. 1639h. 2 78 FR 10368 (Feb. 13, 2013). 3 78 FR 48548 (Aug. 8, 2013). 4 78 FR 78520 (Dec. 26, 2013). 5 See NCUA: 12 CFR 722.3; FHFA: 12 CFR part 1222. Although the FDIC adopted the Bureau’s version of the regulation, the FDIC did not issue its own regulation containing a cross-reference to the Bureau’s version. See 78 FR 10368, 10370 (Feb. 13, 2013). 6 12 CFR 34.203(b)(2) (OCC); 12 CFR 226.43(b)(2) (Board); and 12 CFR 1026.35(c)(2)(ii) (Bureau). 7 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). VerDate Sep<11>2014 15:59 Oct 29, 2019 Jkt 250001 W, the OCC, the Board, and the Bureau will not adjust the threshold amounts from the prior year.8 On November 30, 2016, the OCC, the Board, and the Bureau published a final rule in the Federal Register to memorialize the calculation method used by the agencies each year to adjust the exemption threshold to ensure that the values for the exemption threshold keep pace with the CPI–W (HPML Small Dollar Adjustment Calculation Rule).9 The HPML Small Dollar Adjustment Calculation Rule memorialized the policy that, if there is no annual percentage increase in the CPI–W, the OCC, the Board, and Bureau will not adjust the exemption threshold from the prior year. The HPML Small Dollar Adjustment Calculation Rule also provided that, in years following a year in which the exemption threshold was not adjusted because there was a decrease in the CPI–W from 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. 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; 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. II. 2020 Adjustment and Commentary Revision Effective January 1, 2020, the exemption threshold amount is increased from $26,700 to $27,200. This increase is based on the CPI–W in effect on June 1, 2019, which was reported on May 10, 2019. The Bureau of Labor Statistics publishes consumer-based indices monthly, but does not report a CPI change on June 1; indices are reported in the middle of the prior month. The CPI–W is a subset of the CPI–U index (based on all urban consumers) and represents approximately 29 percent of the U.S. population. The CPI–W reported on May 10, 2019, reflects a 1.9 percent increase in the CPI–W from April 2018 8 See 12 CFR part 34, appendix C to subpart G, comment 203(b)(2)–1 and –2 (OCC); 12 CFR part 226, Supplement I, comment 43(b)(2)–1 and –2 (Board); and 12 CFR part 1026, Supplement I, comment 35(c)(2)(ii)–1 and –2 (Bureau). 9 See 81 FR 86250 (Nov. 30, 2016). PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 to April 2019. Accordingly, the 1.9 percent increase in the CPI–W from April 2018 to April 2019 results in an exemption threshold amount of $27,200. 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.vii to 12 CFR part 34, appendix C to subpart G (OCC); • Comment 43(b)(2)–3.vii to Supplement I of 12 CFR part 226 (Board); and • Comment 35(c)(2)(ii)–3.vii to Supplement I of 12 CFR part 1026 (Bureau). These new comments state that, from January 1, 2020, through December 31, 2020, the threshold amount is $27,200. These revisions are effective January 1, 2020.10 III. Regulatory Analysis Administrative Procedure Act Under the Administrative Procedure Act, notice and opportunity for public comment are not required if the agency finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest.11 The amendments in this rule are technical and apply the method previously memorialized in the December 2013 Supplemental Final Rule and the HPML Small Dollar Adjustment Calculation Rule. 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 are unnecessary. Therefore, the amendments are adopted in final form. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA) does not apply to a rulemaking where a general notice of proposed rulemaking is not required.12 As noted previously, the agencies have determined that it is unnecessary to publish a general notice of proposed rulemaking for this joint final rule. Accordingly, the RFA’s requirements relating to an initial and final regulatory flexibility analysis do not apply. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995,13 the agencies 10 The Office of the Federal Register requires the OCC, the Board, and the Bureau to reprint sections of commentary being amended in their entirety, rather than solely printing the amended portion. Therefore, sections of commentary included in this document show the language of those sections in their entirety. 11 5 U.S.C. 553(b)(B). 12 5 U.S.C. 603(a), 604(a). 13 44 U.S.C. 3506; 5 CFR part 1320. E:\FR\FM\30OCR1.SGM 30OCR1 Federal Register / Vol. 84, No. 210 / Wednesday, October 30, 2019 / Rules and Regulations 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 analyzes proposed rules for the factors listed in Section 202 of the Unfunded Mandates Reform Act of 1995, before promulgating a final rule for which a general notice of proposed rulemaking was published.14 As discussed above, the OCC has determined that the publication of a general notice of proposed rulemaking is unnecessary. Bureau Congressional Review Act Statement 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, 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: U.S.C. 1532. VerDate Sep<11>2014 15:59 Oct 29, 2019 Jkt 250001 1. The authority citation for part 34 continues to read as follows: ■ Authority: 12 U.S.C. 1 et seq., 25b, 29, 93a, 371, 1462a, 1463, 1464, 1465, 1701j–3, 1828(o), 3331 et seq., 5101 et seq., and 5412(b)(2)(B) and 15 U.S.C. 1639h. 2. In appendix C to subpart G, under Section 34.203—Appraisals for HigherPriced Mortgage Loans, revise Paragraph 34.203(b)(2) to read as follows: ■ Appendix C to Subpart G—OCC Interpretations * * * * * Section 34.203—Appraisals for Higher-Priced Mortgage Loans Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), the Bureau will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to the rule taking effect. The Office of Information and Regulatory Affairs (OIRA) has designated this rule as not a ‘‘major rule’’ as defined by 5 U.S.C. 804(2). 14 2 PART 34—REAL ESTATE LENDING AND APPRAISALS * * * * * Paragraph 34.203(b)(2) 1. Threshold amount. For purposes of § 34.203(b)(2), the threshold amount in effect during a particular period is the amount stated in comment 203(b)(2)–3 for that period. The threshold amount is adjusted effective January 1 of each year by any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI–W) that was in effect on the preceding June 1. Comment 203(b)(2)– 3 will be amended to provide the 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 PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 58015 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. v. From January 1, 2018, through December 31, 2018, the threshold amount is $26,000. vi. From January 1, 2019, through December 31, 2019, the threshold amount is $26,700. vii. From January 1, 2020, through December 31, 2020, the threshold amount is $27,200. 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 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, revise Paragraph 43(b)(2) to read as follows: ■ E:\FR\FM\30OCR1.SGM 30OCR1 58016 Federal Register / Vol. 84, No. 210 / Wednesday, October 30, 2019 / Rules and Regulations Supplement I to Part 226—Official Staff Interpretations * * * * * Section 226.43—Appraisals for Higher-Risk Mortgage Loans * * * * * 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 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. v. From January 1, 2018, through December 31, 2018, the threshold amount is $26,000. VerDate Sep<11>2014 15:59 Oct 29, 2019 Jkt 250001 vi. From January 1, 2019, through December 31, 2019, the threshold amount is $26,700. vii. From January 1, 2020, through December 31, 2020, the threshold amount is $27,200. 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 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 § 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, revise Paragraph 35(c)(2)(ii) to read as follows: ■ Supplement I to Part 1026—Official Interpretations * * * * * Section 1026.35—Requirements for HigherPriced Mortgage Loans * * * * * 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 Wage PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 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. v. From January 1, 2018, through December 31, 2018, the threshold amount is $26,000. vi. From January 1, 2019, through December 31, 2019, the threshold amount is $26,700. vii. From January 1, 2020, through December 31, 2020, the threshold amount is $27,200. 4. Qualifying for exemption—in general. A transaction is exempt under § 1026.35(c)(2)(ii) if the creditor makes an extension of credit at consummation that is equal to or below the threshold amount in effect at the time of consummation. 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 E:\FR\FM\30OCR1.SGM 30OCR1 Federal Register / Vol. 84, No. 210 / Wednesday, October 30, 2019 / Rules and Regulations 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 § 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: September 27, 2019. Morris R. Morgan, First Deputy Comptroller, Comptroller of the Currency. By order of the Board of Governors of the Federal Reserve System, acting through the Secretary of the Board under delegated authority, September 20, 2019. Ann E. Misback, Secretary of the Board. Dated: September 24, 2019. Thomas Pahl, Policy Associate Director, Bureau of Consumer Financial Protection. [FR Doc. 2019–21559 Filed 10–29–19; 8:45 am] BILLING CODE: 4810–33– 6210–01– 4810–AM–P FEDERAL RESERVE SYSTEM 12 CFR Part 213 [Docket No. R–1676] RIN 7100–AF 59 BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1013 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. AGENCY: The Board and the Bureau are finalizing amendments to the official interpretations and commentary for the agencies’ regulations that implement the Consumer Leasing Act (CLA). The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank 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). SUMMARY: VerDate Sep<11>2014 15:59 Oct 29, 2019 Jkt 250001 If there is no annual percentage increase in the CPI–W, the Board and the Bureau will not adjust this exemption threshold from the prior year. However, in years following a year in which the exemption threshold was not adjusted, 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. Based on the annual percentage increase in the CPI–W as of June 1, 2019, the exemption threshold will increase from $57,200 to $58,300 effective January 1, 2020. Because the Dodd-Frank Act also requires similar adjustments in the Truth in Lending Act’s threshold for exempt consumer credit transactions, the Board and the Bureau are making similar amendments 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, 2020. 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: Kristen Phinnessee, Counsel, Office of Regulations, Bureau of Consumer Financial Protection, at (202) 435–7700. If you require this document in an alternative electronic format, please contact CFPB_Accessibility@ cfpb.gov. 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 after December 31, 2011, these thresholds be adjusted annually for inflation by the annual percentage increase in the Consumer Price Index 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, 2111 (2010). PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 58017 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, 12 CFR part 1013, substantially duplicating the Board’s Regulation M.4 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 DoddFrank Act, and the Board’s Regulation M continues to apply to those entities.5 The Board’s and the Bureau’s regulations,6 and their accompanying commentaries, provide that the exemption threshold will be adjusted annually effective January 1 of each year based on any annual percentage increase in the CPI–W that was in effect on the preceding June 1. They further provide that any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the 3 76 FR 18349 (Apr. 4, 2011); 76 FR 18354 (Apr. 4, 2011). 4 See 76 FR 78500 (Dec. 19, 2011); 81 FR 25323 (Apr. 28, 2016). 5 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 provides that 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). 6 12 CFR 213.2(e)(1) (Board) and 12 CFR 1013.2(e)(1) (Bureau). E:\FR\FM\30OCR1.SGM 30OCR1

Agencies

[Federal Register Volume 84, Number 210 (Wednesday, October 30, 2019)]
[Rules and Regulations]
[Pages 58013-58017]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21559]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 34

[Docket No. OCC-2019-0022]
RIN 1557-AE68

FEDERAL RESERVE SYSTEM

12 CFR Part 226

[Docket No. R-1678]
RIN 7100-AF-61

BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1026


Appraisals for Higher-Priced Mortgage Loans Exemption Threshold

AGENCY: Office of the Comptroller of the Currency, Treasury (OCC), 
Board of Governors of the Federal Reserve System (Board); and Bureau of 
Consumer Financial Protection (Bureau).

ACTION: Final rules, official interpretations and commentary.

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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. However, in years following a 
year in which the exemption threshold was not adjusted, the threshold 
is calculated by applying the annual percentage increase 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. Based on the CPI-W in effect as of June 1, 2019, the exemption 
threshold will increase from $26,700 to $27,200, effective January 1, 
2020.

DATES: This final rule is effective January 1, 2020.

FOR FURTHER INFORMATION CONTACT: 
    OCC: MaryAnn Nash, Counsel, Chief Counsel's Office, (202) 649-6287; 
for persons who are deaf or 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: Kristen Phinnessee, Counsel, Office of Regulations, Bureau 
of Consumer Financial Protection, at (202) 435-7700. If you require 
this document in an alternative electronic format, please contact 
[email protected].

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

[[Page 58014]]

mortgages.'' \1\ In January 2013, the Agencies issued a joint final 
rule implementing these requirements and adopted the term ``higher-
priced mortgage loan'' (HPML) instead of ``higher-risk mortgage'' (the 
January 2013 Final Rule).\2\ In July 2013, the Agencies proposed 
additional exemptions from the January 2013 Final Rule (the 2013 
Supplemental Proposed Rule).\3\ In December 2013, the Agencies issued a 
supplemental final rule with additional exemptions from the January 
2013 Final Rule (the December 2013 Supplemental Final Rule).\4\ Among 
other exemptions, the Agencies adopted an exemption from the new HPML 
appraisal rules for transactions of $25,000 or less, to be adjusted 
annually for inflation.
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    \1\ Public Law 111-203, section 1471, 124 Stat. 1376, 2185-87 
(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 OCC's, the Board's, and the Bureau'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\
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    The OCC's, Board's, and Bureau's regulations,\6\ and their 
accompanying interpretations,\7\ 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.\8\
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    \6\ 12 CFR 34.203(b)(2) (OCC); 12 CFR 226.43(b)(2) (Board); and 
12 CFR 1026.35(c)(2)(ii) (Bureau).
    \7\ 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).
    \8\ See 12 CFR part 34, appendix C to subpart G, comment 
203(b)(2)-1 and -2 (OCC); 12 CFR part 226, Supplement I, comment 
43(b)(2)-1 and -2 (Board); and 12 CFR part 1026, Supplement I, 
comment 35(c)(2)(ii)-1 and -2 (Bureau).
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    On November 30, 2016, the OCC, the Board, and the Bureau published 
a final rule in the Federal Register to memorialize the calculation 
method used by the agencies each year to adjust the exemption threshold 
to ensure that the values for the exemption threshold keep pace with 
the CPI-W (HPML Small Dollar Adjustment Calculation Rule).\9\ The HPML 
Small Dollar Adjustment Calculation Rule memorialized the policy that, 
if there is no annual percentage increase in the CPI-W, the OCC, the 
Board, and Bureau will not adjust the exemption threshold from the 
prior year. The HPML Small Dollar Adjustment Calculation Rule also 
provided that, in years following a year in which the exemption 
threshold was not adjusted because there was a decrease in the CPI-W 
from 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. 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; 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.
---------------------------------------------------------------------------

    \9\ See 81 FR 86250 (Nov. 30, 2016).
---------------------------------------------------------------------------

II. 2020 Adjustment and Commentary Revision

    Effective January 1, 2020, the exemption threshold amount is 
increased from $26,700 to $27,200. This increase is based on the CPI-W 
in effect on June 1, 2019, which was reported on May 10, 2019. The 
Bureau of Labor Statistics publishes consumer-based indices monthly, 
but does not report a CPI change on June 1; indices are reported in the 
middle of the prior month. The CPI-W is a subset of the CPI-U index 
(based on all urban consumers) and represents approximately 29 percent 
of the U.S. population. The CPI-W reported on May 10, 2019, reflects a 
1.9 percent increase in the CPI-W from April 2018 to April 2019. 
Accordingly, the 1.9 percent increase in the CPI-W from April 2018 to 
April 2019 results in an exemption threshold amount of $27,200. 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.vii to 12 CFR part 34, appendix C to 
subpart G (OCC);
     Comment 43(b)(2)-3.vii to Supplement I of 12 CFR part 226 
(Board); and
     Comment 35(c)(2)(ii)-3.vii to Supplement I of 12 CFR part 
1026 (Bureau).

These new comments state that, from January 1, 2020, through December 
31, 2020, the threshold amount is $27,200. These revisions are 
effective January 1, 2020.\10\
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    \10\ The Office of the Federal Register requires the OCC, the 
Board, and the Bureau to reprint sections of commentary being 
amended in their entirety, rather than solely printing the amended 
portion. Therefore, sections of commentary included in this document 
show the language of those sections in their entirety.
---------------------------------------------------------------------------

III. Regulatory Analysis

Administrative Procedure Act

    Under the Administrative Procedure Act, notice and opportunity for 
public comment are not required if the agency finds that notice and 
public comment are impracticable, unnecessary, or contrary to the 
public interest.\11\ The amendments in this rule are technical and 
apply the method previously memorialized in the December 2013 
Supplemental Final Rule and the HPML Small Dollar Adjustment 
Calculation Rule. 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 are unnecessary. Therefore, 
the amendments are adopted in final form.
---------------------------------------------------------------------------

    \11\ 5 U.S.C. 553(b)(B).
---------------------------------------------------------------------------

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) does not apply to a rulemaking 
where a general notice of proposed rulemaking is not required.\12\ As 
noted previously, the agencies have determined that it is unnecessary 
to publish a general notice of proposed rulemaking for this joint final 
rule. Accordingly, the RFA's requirements relating to an initial and 
final regulatory flexibility analysis do not apply.
---------------------------------------------------------------------------

    \12\ 5 U.S.C. 603(a), 604(a).
---------------------------------------------------------------------------

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995,\13\ the 
agencies

[[Page 58015]]

reviewed this final rule. No collections of information pursuant to the 
Paperwork Reduction Act are contained in the final rule.
---------------------------------------------------------------------------

    \13\ 44 U.S.C. 3506; 5 CFR part 1320.
---------------------------------------------------------------------------

Unfunded Mandates Reform Act

    The OCC analyzes proposed rules for the factors listed in Section 
202 of the Unfunded Mandates Reform Act of 1995, before promulgating a 
final rule for which a general notice of proposed rulemaking was 
published.\14\ As discussed above, the OCC has determined that the 
publication of a general notice of proposed rulemaking is unnecessary.
---------------------------------------------------------------------------

    \14\ 2 U.S.C. 1532.
---------------------------------------------------------------------------

Bureau Congressional Review Act Statement

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Bureau will submit a report containing this rule and other required 
information to the U.S. Senate, the U.S. House of Representatives, and 
the Comptroller General of the United States prior to the rule taking 
effect. The Office of Information and Regulatory Affairs (OIRA) has 
designated this rule as not a ``major rule'' as defined by 5 U.S.C. 
804(2).

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, 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, 1462a, 1463, 
1464, 1465, 1701j-3, 1828(o), 3331 et seq., 5101 et seq., and 
5412(b)(2)(B) and 15 U.S.C. 1639h.


0
2. In appendix C to subpart G, under Section 34.203--Appraisals for 
Higher-Priced Mortgage Loans, revise Paragraph 34.203(b)(2) to read as 
follows:

Appendix C to Subpart G--OCC Interpretations

* * * * *

Section 34.203--Appraisals for Higher-Priced Mortgage Loans

* * * * *

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.
    v. From January 1, 2018, through December 31, 2018, the 
threshold amount is $26,000.
    vi. From January 1, 2019, through December 31, 2019, the 
threshold amount is $26,700.
    vii. From January 1, 2020, through December 31, 2020, the 
threshold amount is $27,200.
    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, revise Paragraph 43(b)(2) to read as 
follows:

[[Page 58016]]

Supplement I to Part 226--Official Staff Interpretations

* * * * *

Section 226.43--Appraisals for Higher-Risk Mortgage Loans

* * * * *

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 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.
    v. From January 1, 2018, through December 31, 2018, the 
threshold amount is $26,000.
    vi. From January 1, 2019, through December 31, 2019, the 
threshold amount is $26,700.
    vii. From January 1, 2020, through December 31, 2020, the 
threshold amount is $27,200.
    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, revise Paragraph 35(c)(2)(ii) to read 
as follows:

Supplement I to Part 1026--Official Interpretations

* * * * *

Section 1026.35--Requirements for Higher-Priced Mortgage Loans

* * * * *

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.
    v. From January 1, 2018, through December 31, 2018, the 
threshold amount is $26,000.
    vi. From January 1, 2019, through December 31, 2019, the 
threshold amount is $26,700.
    vii. From January 1, 2020, through December 31, 2020, the 
threshold amount is $27,200.
    4. Qualifying for exemption--in general. A transaction is exempt 
under Sec.  1026.35(c)(2)(ii) if the creditor makes an extension of 
credit at consummation that is equal to or below the threshold 
amount in effect at the time of consummation.
    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

[[Page 58017]]

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: September 27, 2019.
Morris R. Morgan,
First Deputy Comptroller, Comptroller of the Currency.
    By order of the Board of Governors of the Federal Reserve 
System, acting through the Secretary of the Board under delegated 
authority, September 20, 2019.
Ann E. Misback,
Secretary of the Board.
    Dated: September 24, 2019.
Thomas Pahl,
Policy Associate Director, Bureau of Consumer Financial Protection.
[FR Doc. 2019-21559 Filed 10-29-19; 8:45 am]
BILLING CODE: 4810-33- 6210-01- 4810-AM-P