Appraisals for Higher-Priced Mortgage Loans Exemption Threshold, 63663-63666 [2022-22820]
Download as PDF
<![CDATA[
63663
Rules and Regulations
Federal Register
Vol. 87, No. 202
Thursday, October 20, 2022
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents.
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 34
[Docket No. OCC–2022–0018]
RIN 1557–AF17
FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Docket No. R–1785]
RIN 7100–AG43
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
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
lotter on DSK11XQN23PROD with RULES1
SUMMARY:
VerDate Sep<11>2014
15:48 Oct 19, 2022
Jkt 259001
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. Additionally, in years following a
year in which the exemption threshold
was not adjusted because the CPI–W
decreased, 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, 2022, the exemption
threshold will increase from $28,500 to
$31,000, effective January 1, 2023.
DATES: This final rule is effective
January 1, 2023.
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 TTY–TRS, please
call 711 from any telephone, anywhere
in the United States.
Bureau: Thomas Dowell, Senior
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 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
mortgage loan’’ (HPML) instead of
‘‘higher-risk mortgage’’ (the January
2013 Final Rule).2 In July 2013, the
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).
PO 00000
Frm 00001
Fmt 4700
Sfmt 4700
Agencies proposed additional
exemptions from the January 2013 Final
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, Board’s, and 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 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
3 78
FR 48548 (Aug. 8, 2013).
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
4 78
E:\FR\FM\20OCR1.SGM
Continued
20OCR1
63664
Federal Register / Vol. 87, No. 202 / Thursday, October 20, 2022 / Rules and Regulations
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, 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. 2023 Adjustment and Commentary
Revision
lotter on DSK11XQN23PROD with RULES1
Effective January 1, 2023, the
exemption threshold amount is
increased from $28,500 to $31,000. This
amount is based on the CPI–W in effect
on June 1, 2022, which was reported on
May 11, 2022 (based on April 2022
data).10 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 11, 2022, reflects an 8.9 percent
increase in the CPI–W from April 2021
to April 2022. Accordingly, the 8.9
percent increase in the CPI–W from
April 2021 to April 2022 results in an
(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).
10 The Bureau of Labor Statistics calculates
consumer-based indices for each month but does
not report those indices until the middle of the
following month. As such, the most recently
reported indices as of June 1, 2022 were reported
on May 11, 2022 and reflect economic conditions
in April 2022.
VerDate Sep<11>2014
15:48 Oct 19, 2022
Jkt 259001
exemption threshold amount of $31,000,
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.x to 12 CFR
part 34, appendix C to subpart G (OCC);
• Comment 43(b)(2)–3.x to
Supplement I of 12 CFR part 226
(Board); and
• Comment 35(c)(2)(ii)–3.x to
Supplement I of 12 CFR part 1026
(Bureau).
These new comments state that, from
January 1, 2023, through December 31,
2023, the threshold amount is $31,000.
These revisions are effective January 1,
2023.
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 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
reviewed this final rule. The Agencies
have determined that this final rule does
not create any new information
collections or substantially revise any
existing collections.
11 5
U.S.C. 553(b)(B).
U.S.C. 603(a), 604(a).
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.
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 has
designated this rule as not a ‘‘major
rule’’ as defined by 5 U.S.C. 804(2).
Bureau Signing Authority
The Associate Director of Research,
Markets, and Regulations, Janis K.
Pappalardo, having reviewed and
approved this document, is delegating
the authority to electronically sign this
document to Grace Feola, Bureau
Federal Register Liaison, for purposes
of publication in the Federal Register.
List of Subjects
12 CFR Part 34
Accounting, 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, Banks, Banking,
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:
12 5
PO 00000
Frm 00002
Fmt 4700
Sfmt 4700
14 2
E:\FR\FM\20OCR1.SGM
U.S.C. 1532.
20OCR1
Federal Register / Vol. 87, No. 202 / Thursday, October 20, 2022 / Rules and Regulations
PART 34— REAL ESTATE LENDING
AND APPRAISALS
1. The authority citation for part 34
continues to read as follows:
■
Authority: 12 U.S.C. 1 et seq., 25b, 29, 93a,
371, 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, 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
lotter on DSK11XQN23PROD with RULES1
*
*
*
*
*
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
VerDate Sep<11>2014
15:48 Oct 19, 2022
Jkt 259001
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.
ix. From January 1, 2022, through
December 31, 2022, the threshold amount is
$28,500.
x. From January 1, 2023, through December
31, 2023, the threshold amount is $31,000.
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.
PO 00000
Frm 00003
Fmt 4700
Sfmt 4700
63665
4. In Supplement I to part 226, under
Section 226.43—Appraisals for HigherRisk 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
§ 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.
E:\FR\FM\20OCR1.SGM
20OCR1
63666
Federal Register / Vol. 87, No. 202 / Thursday, October 20, 2022 / Rules and Regulations
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.
ix. From January 1, 2022, through
December 31, 2022, the threshold amount is
$28,500.
x. From January 1, 2023, through December
31, 2023, the threshold amount is $31,000.
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:
lotter on DSK11XQN23PROD with RULES1
■
Supplement I to Part 1026—Official
Interpretations
*
*
*
VerDate Sep<11>2014
*
*
15:48 Oct 19, 2022
Jkt 259001
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
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.
PO 00000
Frm 00004
Fmt 4700
Sfmt 4700
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.
ix. From January 1, 2022, through
December 31, 2022, the threshold amount is
$28,500.
x. From January 1, 2023, through December
31, 2023, the threshold amount is $31,000.
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
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).
*
*
*
*
*
Michael J. Hsu,
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 E. Misback,
Secretary of the Board.
Grace Feola,
Federal Register Liaison, Bureau of Consumer
Financial Protection.
[FR Doc. 2022–22820 Filed 10–19–22; 8:45 am]
BILLING CODE 4810–AM– 4810–33–6210–01–P
FEDERAL RESERVE SYSTEM
12 CFR Part 213
[Docket No. R–1783]
RIN 7100–AG41
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).
AGENCY:
E:\FR\FM\20OCR1.SGM
20OCR1
]]>Agencies
[Federal Register Volume 87, Number 202 (Thursday, October 20, 2022)]
[Rules and Regulations]
[Pages 63663-63666]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-22820]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
========================================================================
Federal Register / Vol. 87, No. 202 / Thursday, October 20, 2022 /
Rules and Regulations
[[Page 63663]]
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 34
[Docket No. OCC-2022-0018]
RIN 1557-AF17
FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Docket No. R-1785]
RIN 7100-AG43
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.
-----------------------------------------------------------------------
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. Additionally, in years
following a year in which the exemption threshold was not adjusted
because the CPI-W decreased, 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, 2022, the exemption threshold will
increase from $28,500 to $31,000, effective January 1, 2023.
DATES: This final rule is effective January 1, 2023.
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 TTY-TRS, please call 711 from any
telephone, anywhere in the United States.
Bureau: Thomas Dowell, Senior 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 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 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.\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).
---------------------------------------------------------------------------
The OCC's, Board's, and 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 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\
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
[[Page 63664]]
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, 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. 2023 Adjustment and Commentary Revision
Effective January 1, 2023, the exemption threshold amount is
increased from $28,500 to $31,000. This amount is based on the CPI-W in
effect on June 1, 2022, which was reported on May 11, 2022 (based on
April 2022 data).\10\ 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 11, 2022, reflects an 8.9
percent increase in the CPI-W from April 2021 to April 2022.
Accordingly, the 8.9 percent increase in the CPI-W from April 2021 to
April 2022 results in an exemption threshold amount of $31,000, after
rounding. The OCC, the Board, and the Bureau are revising the
commentaries to their respective regulations to add new comments as
follows:
---------------------------------------------------------------------------
\10\ The Bureau of Labor Statistics calculates consumer-based
indices for each month but does not report those indices until the
middle of the following month. As such, the most recently reported
indices as of June 1, 2022 were reported on May 11, 2022 and reflect
economic conditions in April 2022.
---------------------------------------------------------------------------
Comment 203(b)(2)-3.x to 12 CFR part 34, appendix C to
subpart G (OCC);
Comment 43(b)(2)-3.x to Supplement I of 12 CFR part 226
(Board); and
Comment 35(c)(2)(ii)-3.x to Supplement I of 12 CFR part
1026 (Bureau).
These new comments state that, from January 1, 2023, through
December 31, 2023, the threshold amount is $31,000. These revisions are
effective January 1, 2023.
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 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 reviewed this final rule. The Agencies have determined that
this final rule does not create any new information collections or
substantially revise any existing collections.
---------------------------------------------------------------------------
\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 has designated
this rule as not a ``major rule'' as defined by 5 U.S.C. 804(2).
Bureau Signing Authority
The Associate Director of Research, Markets, and Regulations, Janis
K. Pappalardo, having reviewed and approved this document, is
delegating the authority to electronically sign this document to Grace
Feola, Bureau Federal Register Liaison, for purposes of publication in
the Federal Register.
List of Subjects
12 CFR Part 34
Accounting, 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, Banks, Banking, 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:
[[Page 63665]]
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, 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.
ix. From January 1, 2022, through December 31, 2022, the
threshold amount is $28,500.
x. From January 1, 2023, through December 31, 2023, the
threshold amount is $31,000.
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, 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.
[[Page 63666]]
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.
ix. From January 1, 2022, through December 31, 2022, the
threshold amount is $28,500.
x. From January 1, 2023, through December 31, 2023, the
threshold amount is $31,000.
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.
ix. From January 1, 2022, through December 31, 2022, the
threshold amount is $28,500.
x. From January 1, 2023, through December 31, 2023, the
threshold amount is $31,000.
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 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).
* * * * *
Michael J. Hsu,
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 E. Misback,
Secretary of the Board.
Grace Feola,
Federal Register Liaison, Bureau of Consumer Financial Protection.
[FR Doc. 2022-22820 Filed 10-19-22; 8:45 am]
BILLING CODE 4810-AM- 4810-33-6210-01-P
