Appraisals for Higher-Priced Mortgage Loans Exemption Threshold, 79385-79389 [2020-25872]

Download as PDF Federal Register / Vol. 85, No. 238 / Thursday, December 10, 2020 / Rules and Regulations and by the full Board on May 7, 2019, were unanimous. There were no opposing votes, and no handlers commented on the rule during the comment period. The handlers serving on the MORC and the Board did not feel that the additional information required by the change represented a significant burden to the reporting requirements. AMS believes that benefits of this change to the marketing of walnuts outweigh the concerns of the minimal increase in the reporting burden. Also, AMS finds the claim of commitment data being impacted by cancelled orders or order adjustments to be highly speculative, with no firm evidence presented to substantiate the assertion. Thus, there are no changes made to the final rule. In addition, the comment about changes to the data created by potential backorders may not materialize, since handlers are free to make interhandler transfers of walnuts to meet their purchase commitments; and the nature of agricultural commodities, in general, is not conducive to the development of backorders. In agriculture, a crop is produced and harvested, and more is not coming until about a year later. Accordingly, no changes will be made to the rule as proposed. A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: https:// www.ams.usda.gov/rules-regulations/ moa/small-businesses. Any questions about the compliance guide should be sent to Richard Lower at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section. After consideration of all relevant material presented, including the information and recommendation submitted by the Board and other available information, it is hereby found that this rule will tend to effectuate the declared policy of the Act. List of Subjects in 7 CFR Part 984 Marketing agreements, Reporting and recordkeeping requirements, Walnuts. For the reasons set forth in the preamble, 7 CFR part 984 is amended as follows: jbell on DSKJLSW7X2PROD with RULES 1. The authority citation for 7 CFR part 984 continues to read as follows: ■ Authority: 7 U.S.C. 601–674. 2. Amend § 984.472 by revising the section heading and adding paragraph (c) to read as follows: VerDate Sep<11>2014 16:15 Dec 09, 2020 Jkt 253001 * * * * * (c) Reports of merchantable walnuts on which handlers have made purchase commitments with buyers during the month, but which have not yet been shipped, shall be submitted to the Board on CWB Form No. 6, not later than the 5th day of the month following the month in which the walnuts were committed. Such reports shall show the quantity of walnuts committed in either inshell or shelled pounds. If the handler made no commitments during any month, he/she shall mark ‘‘None’’ in the ‘‘Purchase Commitments’’ section of CWB Form No. 6. Bruce Summers, Administrator, Agricultural Marketing Service. [FR Doc. 2020–26880 Filed 12–9–20; 8:45 am] BILLING CODE P DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 34 [Docket No. OCC–2020–0039] RIN 1557–AF04 FEDERAL RESERVE SYSTEM 12 CFR Part 226 [Docket No. R–1729] RIN 7100–AG00 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 establishes special appraisal requirements for ‘‘higher-risk mortgages,’’ termed ‘‘higher-priced mortgage loans’’ or ‘‘HPMLs’’ in the SUMMARY: PART 984—WALNUTS GROWN IN CALIFORNIA ■ § 984.472 Reports of merchantable walnuts, received, shipped, and committed. PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 79385 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) jointly issued 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, 2020, the exemption threshold will remain at $27,200, effective January 1, 2021. DATES: This final rule is effective January 1, 2021. 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: Rachel Ross, AttorneyAdvisor, 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 mortgages.’’ 1 In January 2013, the Agencies jointly issued a final rule implementing these requirements and adopted the term ‘‘higher-priced 1 Public Law 111–203, section 1471, 124 Stat. 1376, 2185–87 (2010), codified at TILA section 129H, 15 U.S.C. 1639h. E:\FR\FM\10DER1.SGM 10DER1 79386 Federal Register / Vol. 85, No. 238 / Thursday, December 10, 2020 / Rules and Regulations 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– W, the OCC, the Board, and the Bureau will not adjust the threshold amounts from the prior year.8 jbell on DSKJLSW7X2PROD with RULES 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). 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 VerDate Sep<11>2014 16:15 Dec 09, 2020 Jkt 253001 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. 2021 Adjustment and Commentary Revision Effective January 1, 2021, the exemption threshold amount remains at $27,200. This amount is based on the CPI–W in effect on June 1, 2020, which was reported on May 12, 2020. 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 12, 2020, reflects a 0.1 percent increase in the CPI–W from April 2019 to April 2020. Accordingly, the 0.1 percent increase in the CPI–W from April 2019 to April 2020 results in an exemption threshold amount of $27,200, after rounding. The OCC, the Board, and the Bureau are revising the (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 00004 Fmt 4700 Sfmt 4700 commentaries to their respective regulations to add new comments as follows: • Comment 203(b)(2)–3.viii to 12 CFR part 34, Appendix C to Subpart G (OCC); • Comment 43(b)(2)–3.viii to Supplement I of 12 CFR part 226 (Board); and • Comment 35(c)(2)(ii)–3.viii to Supplement I of 12 CFR part 1026 (Bureau). These new comments state that, from January 1, 2021, through December 31, 2021, the threshold amount is $27,200. These revisions are effective January 1, 2021. 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.10 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.11 As noted previously, the agencies have determined that it is unnecessary to publish a general notice of proposed rulemaking for this 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 1995,12 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 analyzes proposed rules for the factors listed in Section 202 of the Unfunded Mandates Reform Act of 1995, before promulgating a final rule 10 5 U.S.C. 553(b)(B). U.S.C. 603(a), 604(a). 12 44 U.S.C. 3506; 5 CFR part 1320. 11 5 E:\FR\FM\10DER1.SGM 10DER1 Federal Register / Vol. 85, No. 238 / Thursday, December 10, 2020 / Rules and Regulations for which a general notice of proposed rulemaking was published.13 As discussed above, the OCC has determined that the publication of a general notice of proposed rulemaking is unnecessary. Bureau Congressional Review Act Statement 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., 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, paragraph 34.203(b)(2) is revised to read as follows: 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). ■ Bureau Signing Authority 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. The Acting Associate Director for Research, Markets and Regulations, Dan S. Sokolov, having reviewed and approved this document, is delegating the authority to electronically sign this document to Laura Galban, a Bureau Federal Register Liaison, for purposes of publication in the Federal Register. 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, 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 jbell on DSKJLSW7X2PROD with RULES PART 34—REAL ESTATE LENDING AND APPRAISALS Authority and Issuance For the reasons set forth in the preamble, the OCC amends 12 CFR part 34 as set forth below: 13 2 U.S.C. 1532. VerDate Sep<11>2014 16:15 Dec 09, 2020 Jkt 253001 Appendix C to Subpart G—OCC Interpretations * * * * * Section 34.203—Appraisals for Higher-Priced Mortgage Loans * PO 00000 * * Frm 00005 * Fmt 4700 * Sfmt 4700 79387 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. 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. viii. From January 1, 2021, through December 31, 2021, 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 Higher- ■ E:\FR\FM\10DER1.SGM 10DER1 79388 Federal Register / Vol. 85, No. 238 / Thursday, December 10, 2020 / Rules and Regulations Risk Mortgage Loans, paragraph 43(b)(2) is revised to read as follows: Supplement I to Part 226—Official Staff Interpretations * * * * * Section 226.43—Appraisals for Higher—Risk Mortgage Loans jbell on DSKJLSW7X2PROD with RULES * * * * * 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. VerDate Sep<11>2014 16:15 Dec 09, 2020 Jkt 253001 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. viii. From January 1, 2021, through December 31, 2021, 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, paragraph 35(c)(2)(ii) is revised 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 PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 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 § 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. viii. From January 1, 2021, through December 31, 2021, the threshold amount is $27,200. 4. Qualifying for exemption—in general. A transaction is exempt under E:\FR\FM\10DER1.SGM 10DER1 Federal Register / Vol. 85, No. 238 / Thursday, December 10, 2020 / Rules and Regulations § 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 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). * * * * * Brian P. Brooks Acting 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. Ann Misback, Secretary of the Board. Laura Galban Federal Register Liaison, Bureau of Consumer Financial Protection. [FR Doc. 2020–25872 Filed 12–9–20; 8:45 am] BILLING CODE 6210–01–P 4810–33–P; 4810–AM–P FEDERAL RESERVE SYSTEM 12 CFR Part 209 [Regulation I; Docket No. R–1732] RIN 7100–AG 02 Federal Reserve Bank Capital Stock Board of Governors of the Federal Reserve System. ACTION: Final rule. AGENCY: The Board of Governors (Board) is publishing a final rule that applies an inflation adjustment to the threshold for total consolidated assets in Regulation I. Federal Reserve Bank (Reserve Bank) stockholders that have total consolidated assets above the threshold receive a different dividend rate on their Reserve Bank stock than stockholders with total consolidated assets at or below the threshold. The Federal Reserve Act requires that the Board annually adjust the total consolidated asset threshold to reflect the change in the Gross Domestic Product Price Index, published by the Bureau of Economic Analysis (BEA). jbell on DSKJLSW7X2PROD with RULES SUMMARY: VerDate Sep<11>2014 16:15 Dec 09, 2020 Jkt 253001 Based on the change in the Gross Domestic Product Price Index as of September 30, 2020, the total consolidated asset threshold will be $10,785,000,000 through December 31, 2021. DATES: This final rule is effective January 11, 2021. FOR FURTHER INFORMATION CONTACT: Evan Winerman, Senior Counsel (202– 872–7578), Legal Division; or Michael Long, Senior Financial Institutions Policy Analyst (202–452–2262), Reserve Bank Operations and Payments Systems Division. For users of Telecommunications Device for the Deaf (TDD) only, contact (202) 263–4869. SUPPLEMENTARY INFORMATION: I. Background Regulation I governs the issuance and cancellation of capital stock by the Reserve Banks. Under section 5 of the Federal Reserve Act 1 and Regulation I,2 a member bank must subscribe to capital stock of the Reserve Bank of its district in an amount equal to six percent of the member bank’s capital and surplus. The member bank must pay for one-half of this subscription on the date that the Reserve Bank approves its application for capital stock, while the remaining half of the subscription shall be subject to call by the Board.3 Section 7(a)(1) of the Federal Reserve Act 4 provides that Reserve Bank stockholders with $10 billion or less in total consolidated assets shall receive a six percent dividend on paid-in capital stock, while stockholders with more than $10 billion in total consolidated assets shall receive a dividend on paidin capital stock equal to the lesser of six percent and ‘‘the rate equal to the high yield of the 10-year Treasury note auctioned at the last auction held prior to the payment of such dividend.’’ Section 7(a)(1) requires that the Board adjust the threshold for total consolidated assets annually to reflect the change in the Gross Domestic Product Price Index, published by the BEA. Regulation I implements section 7(a)(1) of the Federal Reserve Act by (1) defining the term ‘‘total consolidated assets,’’ 5 (2) incorporating the statutory 1 12 U.S.C. 287. CFR 209.4(a). 3 12 U.S.C. 287 and 12 CFR 209.4(c)(2). 4 12 U.S.C. 289(a)(1). 5 12 CFR 209.1(d)(3) (‘‘Total consolidated assets means the total assets on the stockholder’s balance sheet as reported by the stockholder on its Consolidated Report of Condition and Income (Call Report) as of the most recent December 31, except in the case of a new member or the surviving stockholder after a merger ‘total consolidated assets’ means (until the next December 31 Call Report 2 12 PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 79389 dividend rates for Reserve Bank stockholders 6 and (3) providing that the Board shall adjust the threshold for total consolidated assets annually to reflect the change in the Gross Domestic Product Price Index.7 The Board has explained that it ‘‘expects to make this adjustment [to the threshold for total consolidated assets] using the final second quarter estimate of the Gross Domestic Product Price Index for each year, published by the Bureau of Economic Analysis.’’ 8 II. Adjustment The Board annually adjusts the $10 billion total consolidated asset threshold based on the change in the Gross Domestic Product Price Index between the second quarter of 2015 (the baseline year) and the second quarter of the current year.9 The second quarter 2020 Gross Domestic Product Price Index estimate published by the BEA in September 2020 (112.860) is 7.85 percent higher than the second quarter 2015 Gross Domestic Product Price Index estimate published by the BEA in September 2020 (104.647). Based on this change in the Gross Domestic Product Price Index, the threshold for total consolidated assets in Regulation I will be $10,785,000,000 as of January 11, 2021. III. Administrative Law Matters Administrative Procedure Act The provisions of 5 U.S.C. 553(b) relating to notice of proposed rulemaking have not been followed in connection with the adoption of these amendments. The amendments involve expected, ministerial adjustments that are required by statute and Regulation I and are consistent with a method previously set forth by the Board.10 Accordingly, the Board finds good cause for determining, and so determines, that notice in accordance with 5 U.S.C. 553(b) is unnecessary. becomes available) the total consolidated assets of the new member or the surviving stockholder at the time of its application for capital stock’’). 6 12 CFR 209.4(e), (c)(1)(ii), and (d)(1)(ii); 209.2(a); and 209.3(d)(3). 7 12 CFR 209.4(f). 8 81 FR 84415, 84417 (Nov. 23, 2016). 9 The BEA makes ongoing revisions to its estimates of the Gross Domestic Product Price Index for historical calendar quarters. The Board calculates annual adjustments from the baseline year (rather than from the prior-year total consolidated asset threshold) to ensure that the adjusted total consolidated asset threshold accurately reflects the cumulative change in the BEA’s most recent estimates of the Gross Domestic Product Price Index. 10 See 12 CFR 209.4(f) and n. 8 and accompanying text, supra. E:\FR\FM\10DER1.SGM 10DER1

Agencies

[Federal Register Volume 85, Number 238 (Thursday, December 10, 2020)]
[Rules and Regulations]
[Pages 79385-79389]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25872]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 34

[Docket No. OCC-2020-0039]
RIN 1557-AF04

FEDERAL RESERVE SYSTEM

12 CFR Part 226

[Docket No. R-1729]
RIN 7100-AG00

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) jointly issued 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, 2020, the exemption 
threshold will remain at $27,200, effective January 1, 2021.

DATES: This final rule is effective January 1, 2021.

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: Rachel Ross, Attorney-Advisor, 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 mortgages.'' \1\ In 
January 2013, the Agencies jointly issued a final rule implementing 
these requirements and adopted the term ``higher-priced

[[Page 79386]]

mortgage loan'' (HPML) instead of ``higher-risk mortgage'' (the January 
2013 Final Rule).\2\ In July 2013, the Agencies proposed additional 
exemptions from the January 2013 Final Rule (the 2013 Supplemental 
Proposed Rule).\3\ In December 2013, the Agencies issued a supplemental 
final rule with additional exemptions from the January 2013 Final Rule 
(the December 2013 Supplemental Final Rule).\4\ Among other exemptions, 
the Agencies adopted an exemption from the new HPML appraisal rules for 
transactions of $25,000 or less, to be adjusted annually for inflation.
---------------------------------------------------------------------------

    \1\ Public Law 111-203, section 1471, 124 Stat. 1376, 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. 2021 Adjustment and Commentary Revision

    Effective January 1, 2021, the exemption threshold amount remains 
at $27,200. This amount is based on the CPI-W in effect on June 1, 
2020, which was reported on May 12, 2020. 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 12, 2020, reflects a 0.1 percent 
increase in the CPI-W from April 2019 to April 2020. Accordingly, the 
0.1 percent increase in the CPI-W from April 2019 to April 2020 results 
in an exemption threshold amount of $27,200, after rounding. 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.viii to 12 CFR part 34, Appendix C to 
Subpart G (OCC);
     Comment 43(b)(2)-3.viii to Supplement I of 12 CFR part 226 
(Board); and
     Comment 35(c)(2)(ii)-3.viii to Supplement I of 12 CFR part 
1026 (Bureau).
    These new comments state that, from January 1, 2021, through 
December 31, 2021, the threshold amount is $27,200. These revisions are 
effective January 1, 2021.

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.\10\ 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.
---------------------------------------------------------------------------

    \10\ 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.\11\ As 
noted previously, the agencies have determined that it is unnecessary 
to publish a general notice of proposed rulemaking for this final rule. 
Accordingly, the RFA's requirements relating to an initial and final 
regulatory flexibility analysis do not apply.
---------------------------------------------------------------------------

    \11\ 5 U.S.C. 603(a), 604(a).
---------------------------------------------------------------------------

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995,\12\ the 
agencies reviewed this final rule. No collections of information 
pursuant to the Paperwork Reduction Act are contained in the final 
rule.
---------------------------------------------------------------------------

    \12\ 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

[[Page 79387]]

for which a general notice of proposed rulemaking was published.\13\ As 
discussed above, the OCC has determined that the publication of a 
general notice of proposed rulemaking is unnecessary.
---------------------------------------------------------------------------

    \13\ 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).

Bureau Signing Authority

    The Acting Associate Director for Research, Markets and 
Regulations, Dan S. Sokolov, having reviewed and approved this 
document, is delegating the authority to electronically sign this 
document to Laura Galban, a Bureau Federal Register Liaison, for 
purposes of publication in the Federal Register.

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, 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., 
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, paragraph 34.203(b)(2) is revised 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.
    viii. From January 1, 2021, through December 31, 2021, 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-

[[Page 79388]]

Risk Mortgage Loans, paragraph 43(b)(2) is revised to read as follows:

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.
    viii. From January 1, 2021, through December 31, 2021, 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, paragraph 35(c)(2)(ii) is revised 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.
    viii. From January 1, 2021, through December 31, 2021, the 
threshold amount is $27,200.
    4. Qualifying for exemption--in general. A transaction is exempt 
under

[[Page 79389]]

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 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).
* * * * *

Brian P. Brooks
Acting 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.

Ann Misback,
Secretary of the Board.
Laura Galban
Federal Register Liaison, Bureau of Consumer Financial Protection.
[FR Doc. 2020-25872 Filed 12-9-20; 8:45 am]
BILLING CODE 6210-01-P 4810-33-P; 4810-AM-P