Truth in Lending Act (Regulation Z) Adjustment to Asset-Size Exemption Threshold, 80435-80439 [2022-28439]
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Federal Register / Vol. 87, No. 250 / Friday, December 30, 2022 / Rules and Regulations
5. Originations. Whether an
institution is a financial institution
depends in part on whether the
institution originated at least 25 closedend mortgage loans in each of the two
preceding calendar years or at least 200
open-end lines of credit in each of the
two preceding calendar years.
Comments 4(a)-2 through –4 discuss
whether activities with respect to a
particular closed-end mortgage loan or
open-end line of credit constitute an
origination for purposes of § 1003.2(g).
6. Branches of foreign banks—treated
as banks. A Federal branch or a Statelicensed or insured branch of a foreign
bank that meets the definition of a
‘‘bank’’ under section 3(a)(1) of the
Federal Deposit Insurance Act (12
U.S.C. 1813(a)) is a bank for the
purposes of § 1003.2(g).
7. Branches and offices of foreign
banks and other entities—treated as
nondepository financial institutions. A
Federal agency, State-licensed agency,
State-licensed uninsured branch of a
foreign bank, commercial lending
company owned or controlled by a
foreign bank, or entity operating under
section 25 or 25A of the Federal Reserve
Act, 12 U.S.C. 601 and 611 (Edge Act
and agreement corporations) may not
meet the definition of ‘‘bank’’ under the
Federal Deposit Insurance Act and may
thereby fail to satisfy the definition of a
depository financial institution under
§ 1003.2(g)(1). An entity is nonetheless
a financial institution if it meets the
definition of nondepository financial
institution under § 1003.2(g)(2).
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Laura Galban,
Federal Register Liaison, Consumer Financial
Protection Bureau.
[FR Doc. 2022–28441 Filed 12–29–22; 8:45 am]
BILLING CODE 4810–AM–P
account for a higher-priced mortgage
loan (HPML). These changes reflect
updates to the exemption from the
escrow requirement in the Truth in
Lending Act (TILA) for creditors that,
together with their affiliates that
regularly extended covered transactions
secured by first liens, had total assets of
less than $2 billion (adjusted annually
for inflation). They also reflect updates
to the exemption the Bureau added, by
implementing section 108 of the
Economic Growth, Regulatory Relief,
and Consumer Protection Act
(EGRRCPA), for certain insured
depository institutions and insured
credit unions with assets of $10 billion
or less (adjusted annually for inflation).
These amendments are based on the
annual percentage change in the average
of the Consumer Price Index for Urban
Wage Earners and Clerical Workers
(CPI–W). Based on the 8.6 percent
increase in the average of the CPI–W for
the 12-month period ending in
November 2022, the exemption
threshold for creditors and their
affiliates that regularly extended
covered transactions secured by first
liens is adjusted to $2.537 billion from
$2.336 billion and the exemption
threshold for certain insured depository
institutions and insured credit unions
with assets of $10 billion or less is
adjusted to $11.374 billion from $10.473
billion.
DATES: This rule is effective on January
1, 2023.
FOR FURTHER INFORMATION CONTACT:
Adrien Fernandez, Counsel, Thomas
Dowell, Senior Counsel, Office of
Regulations, at (202) 435–7700. If you
require this document in an alternative
electronic format, please contact CFPB_
Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
I. Background
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1026
Truth in Lending Act (Regulation Z)
Adjustment to Asset-Size Exemption
Threshold
Bureau of Consumer Financial
Protection.
ACTION: Final rule; official
interpretation.
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AGENCY:
The Consumer Financial
Protection Bureau (Bureau) is amending
the official commentary to its
Regulation Z in order to make annual
adjustments to the asset-size thresholds
exempting certain creditors from the
requirement to establish an escrow
SUMMARY:
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Section 129D of TILA generally
requires creditors to establish escrow
accounts for certain first-lien higherpriced mortgage loan transactions.
However, TILA section 129D also
permits the Bureau to exempt creditors
from this higher-priced mortgage loan
escrow requirement if they meet certain
requirements, including any asset-size
threshold that the Bureau may establish.
In the 2013 Escrows Final Rule,1 the
Bureau established an asset-size
threshold of $2 billion, which would
adjust automatically each year, based on
the year-to-year change in the average of
the CPI–W for each 12-month period
ending in November, with rounding to
1 78
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FR 4726 (Jan. 22, 2013).
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80435
the nearest million dollars.2 In 2015, the
Bureau revised the asset-size threshold
for small creditors and how it applies.
The Bureau included in the calculation
of the asset-size threshold the assets of
the creditor’s affiliates that regularly
extended covered transactions secured
by first liens during the applicable
period and added a grace period to
allow an otherwise eligible creditor that
exceeded the asset limit in the
preceding calendar year (but not in the
calendar year before the preceding year)
to continue to operate as a small
creditor with respect to transactions
with applications received before April
1 of the current calendar year.3 For
2022, the threshold was $2.336 billion.
During the 12-month period ending in
November 2022, the average of the CPI–
W increased by 8.6 percent. As a result,
the exemption threshold is increased to
$2.537 billion for 2023. Thus, if the
creditor’s assets together with the assets
of its affiliates that regularly extended
first-lien covered transactions during
calendar year 2022 are less than $2.537
billion on December 31, 2022, and it
meets the other requirements of
§ 1026.35(b)(2)(iii), the creditor will be
exempt from the escrow-accounts
requirement for higher-priced mortgage
loans in 2023 and will also be exempt
from the escrow-accounts requirement
for higher-priced mortgage loans for
purposes of any loan consummated in
2024 with applications received before
April 1, 2024. The adjustment to the
escrows asset-size exemption threshold
also will increase the threshold for
small-creditor portfolio and balloonpayment qualified mortgages under
Regulation Z. The requirements for
small-creditor portfolio qualified
mortgages at § 1026.43(e)(5)(i)(D)
reference the asset threshold in
§ 1026.35(b)(2)(iii)(C). Likewise, the
requirements for balloon-payment
qualified mortgages at § 1026.43(f)(1)(vi)
reference the asset threshold in
§ 1026.35(b)(2)(iii)(C). Under
§ 1026.32(d)(1)(ii)(C), balloon-payment
qualified mortgages that satisfy all
applicable criteria in § 1026.43(f)(1)(i)
through (vi) and (f)(2), including being
made by creditors that have (together
with certain affiliates) total assets below
2 See
12 CFR 1026.35(b)(2)(iii)(C).
80 FR 59943, 59951 (Oct. 2, 2015). The
Bureau also issued an interim final rule in March
2016 to revise certain provisions in Regulation Z to
effectuate the Helping Expand Lending Practices in
Rural Communities Act’s amendments to TILA
(Pub. L. 114–94, section 89003, 129 Stat. 1312,
1800–01 (2015)). The rule broadened the cohort of
creditors that may be eligible under TILA for the
special provisions allowing origination of balloonpayment qualified mortgages and balloon-payment
high-cost mortgages, as well as for the escrow
exemption. See 81 FR 16074 (Mar. 25, 2016).
3 See
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the threshold in § 1026.35(b)(2)(iii)(C),
are also excepted from the prohibition
on balloon payments for high-cost
mortgages.
In the 2018 Economic Growth,
Regulatory Relief, and Consumer
Protection Act (EGRRCPA),4 Congress
directed the Bureau to issue regulations
to add a new exemption from TILA’s
escrow requirement that exempts
transactions by certain insured
depository institutions and insured
credit unions.5 In 2021, the Bureau
issued a final rule implementing this
exemption in § 1026.35(b)(2)(vi) (2021
Escrows Rule).6 The final rule exempted
from the Regulation Z HPML escrow
requirement any loan made by an
insured depository institution or
insured credit union and secured by a
first lien on the principal dwelling of a
consumer if: (1) the institution has
assets of $10 billion or less; (2) the
institution and its affiliates originated
1,000 or fewer loans secured by a first
lien on a principal dwelling during the
preceding calendar year; and (3) certain
of the existing HPML escrow exemption
criteria are met. In the 2021 Escrows
Rule, the Bureau established an assetsize threshold of $10 billion or less in
§ 1026.35(b)(2)(vi)(A), which will adjust
automatically each year, based on the
year-to-year change in the average of the
CPI–W, not seasonally adjusted, for each
12-month period ending in November,
with rounding to the nearest million
dollars. Unlike the asset threshold in
§ 1026.35(b)(2)(iii) and the other
thresholds in § 1026.35(b)(2)(vi),
affiliates are not considered in
calculating compliance with this asset
threshold. For calendar year 2022, the
asset threshold was $10.473 billion.
During the 12-month period ending in
November 2022, the average of the CPI–
W increased by 8.6 percent. As a result,
the exemption threshold is increased to
$11.374 billion for 2023. Thus, a
creditor that is an insured depository
institution or insured credit union that
during calendar year 2022 had assets of
$11.374 billion or less on December 31,
2022, satisfies this criterion for purposes
of any loan consummated in 2023 and
for purposes of any loan secured by a
first lien on a principal dwelling of a
consumer consummated in 2024 for
which the application was received
before April 1, 2024.
4 Public
Law 115–174, 132 Stat. 1296 (2018).
5 EGRRCPA section 108, 132 Stat. 1304–05; 15
U.S.C. 1639d(c)(2).
6 86 FR 9840 (Feb. 17, 2021).
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II. Procedural Requirements
A. Administrative Procedure Act
Under the Administrative Procedure
Act (APA), notice and opportunity for
public comment are not required if the
Bureau finds that notice and public
comment are impracticable,
unnecessary, or contrary to the public
interest. 5 U.S.C. 553(b)(B). Pursuant to
this final rule, comment 35(b)(2)(iii)–1
in Regulation Z is amended to update
the exemption threshold in
§ 1026.35(b)(2)(iii) and comment
35(b)(2)(vi)(A)–1 in Regulation Z is
amended to update the exemption
threshold in § 1026.35(b)(2)(vi). The
amendments in this final rule are
technical and merely apply the formulae
previously established in Regulation Z
for determining any adjustments to the
exemption thresholds. For these
reasons, the Bureau has determined that
publishing a notice of proposed
rulemaking and providing opportunity
for public comment are unnecessary.
Therefore, the amendments are adopted
in final form.
Section 553(d) of the APA generally
requires publication of a final rule not
less than 30 days before its effective
date, except (1) a substantive rule which
grants or recognizes an exemption or
relieves a restriction; (2) interpretive
rules and statements of policy; or (3) as
otherwise provided by the agency for
good cause found and published with
the rule. 5 U.S.C. 553(d). At a minimum,
the Bureau believes the amendments fall
under the third exception to section
553(d). The Bureau finds that there is
good cause to make the amendments
effective on January 1, 2023. The
amendment in this final rule is
technical and non-discretionary, and it
merely applies the method previously
established in the agency’s regulations
for automatic adjustments to the
threshold.
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.7 As noted previously,
the Bureau has determined that it is
unnecessary to publish a general notice
of proposed rulemaking for this final
rule. Accordingly, the RFA’s
requirement relating to an initial and
final regulatory flexibility analysis do
not apply.
C. Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995,8 the Bureau
75
U.S.C. 603(a), 604(a).
U.S.C. 3506; 5 CFR part 1320.
8 44
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reviewed this final rule. The Bureau has
determined that this rule does not create
any new information collections or
substantially revise any existing
collections.
D. Congressional Review Act
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
United States Senate, the United States
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).
E. Signing Authority
Senior Advisor Brian Shearer, 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 in 12 CFR Part 1026
Advertising, Banks, banking,
Consumer protection, Credit, Credit
unions, Mortgages, National banks,
Reporting and recordkeeping
requirements, Savings associations,
Truth-in-lending.
Authority and Issuance
For the reasons set forth above, the
Bureau amends Regulation Z, 12 CFR
part 1026, as set forth below:
PART 1026—TRUTH IN LENDING
(REGULATION Z)
1. 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.
2. In supplement I to part 1026, under
§ 1026.35—Requirements for HigherPriced Mortgage Loans, 35(b)(2)
Exemptions, Paragraphs 35(b)(2)(iii)
and (vi)(A) are revised to read as
follows:
■
Supplement I to Part 1026—Official
Interpretations
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Subpart E—Special Rules for Certain
Home Mortgage Transactions
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Section 1026.35—Requirements for
Higher-Priced Mortgage Loans
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35(b)(2) Exemptions.
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Paragraph 35(b)(2)(iii).
1. Requirements for exemption. Under
§ 1026.35(b)(2)(iii), except as provided
in § 1026.35(b)(2)(v), a creditor need not
establish an escrow account for taxes
and insurance for a higher-priced
mortgage loan, provided the following
four conditions are satisfied when the
higher-priced mortgage loan is
consummated:
i. During the preceding calendar year,
or during either of the two preceding
calendar years if the application for the
loan was received before April 1 of the
current calendar year, a creditor
extended a first-lien covered
transaction, as defined in
§ 1026.43(b)(1), secured by a property
located in an area that is either ‘‘rural’’
or ‘‘underserved,’’ as set forth in
§ 1026.35(b)(2)(iv).
A. In general, whether the rural-orunderserved test is satisfied depends on
the creditor’s activity during the
preceding calendar year. However, if the
application for the loan in question was
received before April 1 of the current
calendar year, the creditor may instead
meet the rural-or-underserved test based
on its activity during the next-to-last
calendar year. This provides creditors
with a grace period if their activity
meets the rural-or-underserved test (in
§ 1026.35(b)(2)(iii)(A)) in one calendar
year but fails to meet it in the next
calendar year.
B. A creditor meets the rural-orunderserved test for any higher-priced
mortgage loan consummated during a
calendar year if it extended a first-lien
covered transaction in the preceding
calendar year secured by a property
located in a rural-or-underserved area. If
the creditor does not meet the rural-orunderserved test in the preceding
calendar year, the creditor meets this
condition for a higher-priced mortgage
loan consummated during the current
calendar year only if the application for
the loan was received before April 1 of
the current calendar year and the
creditor extended a first-lien covered
transaction during the next-to-last
calendar year that is secured by a
property located in a rural or
underserved area. The following
examples are illustrative:
1. Assume that a creditor extended
during 2016 a first-lien covered
transaction that is secured by a property
located in a rural or underserved area.
Because the creditor extended a firstlien covered transaction during 2016
that is secured by a property located in
a rural or underserved area, the creditor
can meet this condition for exemption
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for any higher-priced mortgage loan
consummated during 2017.
2. Assume that a creditor did not
extend during 2016 a first-lien covered
transaction secured by a property that is
located in a rural or underserved area.
Assume further that the same creditor
extended during 2015 a first-lien
covered transaction that is located in a
rural or underserved area. Assume
further that the creditor consummates a
higher-priced mortgage loan in 2017 for
which the application was received in
November 2017. Because the creditor
did not extend during 2016 a first-lien
covered transaction secured by a
property that is located in a rural or
underserved area, and the application
was received on or after April 1, 2017,
the creditor does not meet this
condition for exemption. However,
assume instead that the creditor
consummates a higher-priced mortgage
loan in 2017 based on an application
received in February 2017. The creditor
meets this condition for exemption for
this loan because the application was
received before April 1, 2017, and the
creditor extended during 2015 a firstlien covered transaction that is located
in a rural or underserved area.
ii. The creditor and its affiliates
together extended no more than 2,000
covered transactions, as defined in
§ 1026.43(b)(1), secured by first liens,
that were sold, assigned, or otherwise
transferred by the creditor or its
affiliates to another person, or that were
subject at the time of consummation to
a commitment to be acquired by another
person, during the preceding calendar
year or during either of the two
preceding calendar years if the
application for the loan was received
before April 1 of the current calendar
year. For purposes of
§ 1026.35(b)(2)(iii)(B), a transfer of a
first-lien covered transaction to
‘‘another person’’ includes a transfer by
a creditor to its affiliate.
A. In general, whether this condition
is satisfied depends on the creditor’s
activity during the preceding calendar
year. However, if the application for the
loan in question is received before April
1 of the current calendar year, the
creditor may instead meet this condition
based on activity during the next-to-last
calendar year. This provides creditors
with a grace period if their activity falls
at or below the threshold in one
calendar year but exceeds it in the next
calendar year.
B. For example, assume that in 2015
a creditor and its affiliates together
extended 1,500 loans that were sold,
assigned, or otherwise transferred by the
creditor or its affiliates to another
person, or that were subject at the time
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80437
of consummation to a commitment to be
acquired by another person, and 2,500
such loans in 2016. Because the 2016
transaction activity exceeds the
threshold but the 2015 transaction
activity does not, the creditor satisfies
this condition for exemption for a
higher-priced mortgage loan
consummated during 2017 if the
creditor received the application for the
loan before April 1, 2017, but does not
satisfy this condition for a higher-priced
mortgage loan consummated during
2017 if the application for the loan was
received on or after April 1, 2017.
C. For purposes of
§ 1026.35(b)(2)(iii)(B), extensions of
first-lien covered transactions, during
the applicable time period, by all of a
creditor’s affiliates, as ‘‘affiliate’’ is
defined in § 1026.32(b)(5), are counted
toward the threshold in this section.
‘‘Affiliate’’ is defined in § 1026.32(b)(5)
as ‘‘any company that controls, is
controlled by, or is under common
control with another company, as set
forth in the Bank Holding Company Act
of 1956 (12 U.S.C. 1841 et seq.).’’ Under
the Bank Holding Company Act, a
company has control over a bank or
another company if it directly or
indirectly or acting through one or more
persons owns, controls, or has power to
vote 25 per centum or more of any class
of voting securities of the bank or
company; it controls in any manner the
election of a majority of the directors or
trustees of the bank or company; or the
Federal Reserve Board determines, after
notice and opportunity for hearing, that
the company directly or indirectly
exercises a controlling influence over
the management or policies of the bank
or company. 12 U.S.C. 1841(a)(2).
iii. As of the end of the preceding
calendar year, or as of the end of either
of the two preceding calendar years if
the application for the loan was
received before April 1 of the current
calendar year, the creditor and its
affiliates that regularly extended
covered transactions secured by first
liens, together, had total assets that are
less than the applicable annual asset
threshold.
A. For purposes of
§ 1026.35(b)(2)(iii)(C), in addition to the
creditor’s assets, only the assets of a
creditor’s ‘‘affiliate’’ (as defined by
§ 1026.32(b)(5)) that regularly extended
covered transactions (as defined by
§ 1026.43(b)(1)) secured by first liens,
are counted toward the applicable
annual asset threshold. See comment
35(b)(2)(iii)–1.ii.C for discussion of
definition of ‘‘affiliate.’’
B. Only the assets of a creditor’s
affiliate that regularly extended first-lien
covered transactions during the
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applicable period are included in
calculating the creditor’s assets. The
meaning of ‘‘regularly extended’’ is
based on the number of times a person
extends consumer credit for purposes of
the definition of ‘‘creditor’’ in
§ 1026.2(a)(17). Because covered
transactions are ‘‘transactions secured
by a dwelling,’’ consistent with
§ 1026.2(a)(17)(v), an affiliate regularly
extended covered transactions if it
extended more than five covered
transactions in a calendar year. Also
consistent with § 1026.2(a)(17)(v),
because a covered transaction may be a
high-cost mortgage subject to § 1026.32,
an affiliate regularly extends covered
transactions if, in any 12-month period,
it extends more than one covered
transaction that is subject to the
requirements of § 1026.32 or one or
more such transactions through a
mortgage broker. Thus, if a creditor’s
affiliate regularly extended first-lien
covered transactions during the
preceding calendar year, the creditor’s
assets as of the end of the preceding
calendar year, for purposes of the asset
limit, take into account the assets of that
affiliate. If the creditor, together with its
affiliates that regularly extended firstlien covered transactions, exceeded the
asset limit in the preceding calendar
year—to be eligible to operate as a small
creditor for transactions with
applications received before April 1 of
the current calendar year—the assets of
the creditor’s affiliates that regularly
extended covered transactions in the
year before the preceding calendar year
are included in calculating the creditor’s
assets.
C. If multiple creditors share
ownership of a company that regularly
extended first-lien covered transactions,
the assets of the company count toward
the asset limit for a co-owner creditor if
the company is an ‘‘affiliate,’’ as defined
in § 1026.32(b)(5), of the co-owner
creditor. Assuming the company is not
an affiliate of the co-owner creditor by
virtue of any other aspect of the
definition (such as by the company and
co-owner creditor being under common
control), the company’s assets are
included toward the asset limit of the
co-owner creditor only if the company
is controlled by the co-owner creditor,
‘‘as set forth in the Bank Holding
Company Act.’’ If the co-owner creditor
and the company are affiliates (by virtue
of any aspect of the definition), the coowner creditor counts all of the
company’s assets toward the asset limit,
regardless of the co-owner creditor’s
ownership share. Further, because the
co-owner and the company are mutual
affiliates the company also would count
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all of the co-owner’s assets towards its
own asset limit. See comment
35(b)(2)(iii)–1.ii.C for discussion of the
definition of ‘‘affiliate.’’
D. A creditor satisfies the criterion in
§ 1026.35(b)(2)(iii)(C) for purposes of
any higher-priced mortgage loan
consummated during 2016, for example,
if the creditor (together with its affiliates
that regularly extended first-lien
covered transactions) had total assets of
less than the applicable asset threshold
on December 31, 2015. A creditor that
(together with its affiliates that regularly
extended first-lien covered transactions)
did not meet the applicable asset
threshold on December 31, 2015,
satisfies this criterion for a higherpriced mortgage loan consummated
during 2016 if the application for the
loan was received before April 1, 2016,
and the creditor (together with its
affiliates that regularly extended firstlien covered transactions) had total
assets of less than the applicable asset
threshold on December 31, 2014.
E. Under § 1026.35(b)(2)(iii)(C), the
$2,000,000,000 asset threshold adjusts
automatically each year based on the
year-to-year change in the average of the
Consumer Price Index for Urban Wage
Earners and Clerical Workers, not
seasonally adjusted, for each 12-month
period ending in November, with
rounding to the nearest million dollars.
The Bureau will publish notice of the
asset threshold each year by amending
this comment. For calendar year 2023,
the asset threshold is $2,537,000,000. A
creditor that together with the assets of
its affiliates that regularly extended
first-lien covered transactions during
calendar year 2022 has total assets of
less than $2,537,000,000 on December
31, 2022, satisfies this criterion for
purposes of any loan consummated in
2023 and for purposes of any loan
consummated in 2024 for which the
application was received before April 1,
2024. For historical purposes:
1. For calendar year 2013, the asset
threshold was $2,000,000,000. Creditors
that had total assets of less than
$2,000,000,000 on December 31, 2012,
satisfied this criterion for purposes of
the exemption during 2013.
2. For calendar year 2014, the asset
threshold was $2,028,000,000. Creditors
that had total assets of less than
$2,028,000,000 on December 31, 2013,
satisfied this criterion for purposes of
the exemption during 2014.
3. For calendar year 2015, the asset
threshold was $2,060,000,000. Creditors
that had total assets of less than
$2,060,000,000 on December 31, 2014,
satisfied this criterion for purposes of
any loan consummated in 2015 and, if
the creditor’s assets together with the
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assets of its affiliates that regularly
extended first-lien covered transactions
during calendar year 2014 were less
than that amount, for purposes of any
loan consummated in 2016 for which
the application was received before
April 1, 2016.
4. For calendar year 2016, the asset
threshold was $2,052,000,000. A
creditor that together with the assets of
its affiliates that regularly extended
first-lien covered transactions during
calendar year 2015 had total assets of
less than $2,052,000,000 on December
31, 2015, satisfied this criterion for
purposes of any loan consummated in
2016 and for purposes of any loan
consummated in 2017 for which the
application was received before April 1,
2017.
5. For calendar year 2017, the asset
threshold was $2,069,000,000. A
creditor that together with the assets of
its affiliates that regularly extended
first-lien covered transactions during
calendar year 2016 had total assets of
less than $2,069,000,000 on December
31, 2016, satisfied this criterion for
purposes of any loan consummated in
2017 and for purposes of any loan
consummated in 2018 for which the
application was received before April 1,
2018.
6. For calendar year 2018, the asset
threshold was $2,112,000,000. A
creditor that together with the assets of
its affiliates that regularly extended
first-lien covered transactions during
calendar year 2017 had total assets of
less than $2,112,000,000 on December
31, 2017, satisfied this criterion for
purposes of any loan consummated in
2018 and for purposes of any loan
consummated in 2019 for which the
application was received before April 1,
2019.
7. For calendar year 2019, the asset
threshold was $2,167,000,000. A
creditor that together with the assets of
its affiliates that regularly extended
first-lien covered transactions during
calendar year 2018 had total assets of
less than $2,167,000,000 on December
31, 2018, satisfied this criterion for
purposes of any loan consummated in
2019 and for purposes of any loan
consummated in 2020 for which the
application was received before April 1,
2020.
8. For calendar year 2020, the asset
threshold was $2,202,000,000. A
creditor that together with the assets of
its affiliates that regularly extended
first-lien covered transactions during
calendar year 2019 had total assets of
less than $2,202,000,000 on December
31, 2019, satisfied this criterion for
purposes of any loan consummated in
2020 and for purposes of any loan
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consummated in 2021 for which the
application was received before April 1,
2021.
9. For calendar year 2021, the asset
threshold was $2,230,000,000. A
creditor that together with the assets of
its affiliates that regularly extended
first-lien covered transactions during
calendar year 2020 had total assets of
less than $2,230,000,000 on December
31, 2020, satisfied this criterion for
purposes of any loan consummated in
2021 and for purposes of any loan
consummated in 2022 for which the
application was received before April 1,
2022.
10. For calendar year 2022, the asset
threshold was $2,336,000,000. A
creditor that together with the assets of
its affiliates that regularly extended
first-lien covered transactions during
calendar year 2021 had total assets of
less than $2,336,000,000 on December
31, 2021, satisfied this criterion for
purposes of any loan consummated in
2022 and for purposes of any loan
consummated in 2023 for which the
application was received before April 1,
2023.
iv. The creditor and its affiliates do
not maintain an escrow account for any
mortgage transaction being serviced by
the creditor or its affiliate at the time the
transaction is consummated, except as
provided in § 1026.35(b)(2)(iii)(D)(1)
and (2). Thus, the exemption applies,
provided the other conditions of
§ 1026.35(b)(2)(iii) (or, if applicable, the
conditions for the exemption in
§ 1026.35(b)(2)(vi)) are satisfied, even if
the creditor previously maintained
escrow accounts for mortgage loans,
provided it no longer maintains any
such accounts except as provided in
§ 1026.35(b)(2)(iii)(D)(1) and (2). Once a
creditor or its affiliate begins escrowing
for loans currently serviced other than
those addressed in
§ 1026.35(b)(2)(iii)(D)(1) and (2),
however, the creditor and its affiliate
become ineligible for the exemption in
§ 1026.35(b)(2)(iii) and (vi) on higherpriced mortgage loans they make while
such escrowing continues. Thus, as long
as a creditor (or its affiliate) services and
maintains escrow accounts for any
mortgage loans, other than as provided
in § 1026.35(b)(2)(iii)(D)(1) and (2), the
creditor will not be eligible for the
exemption for any higher-priced
mortgage loan it may make. For
purposes of § 1026.35(b)(2)(iii) and (vi),
a creditor or its affiliate ‘‘maintains’’ an
escrow account only if it services a
mortgage loan for which an escrow
account has been established at least
through the due date of the second
VerDate Sep<11>2014
16:40 Dec 29, 2022
Jkt 259001
periodic payment under the terms of the
legal obligation.
*
*
*
*
*
Paragraph 35(b)(2)(vi)(A).
1. The asset threshold in
§ 1026.35(b)(2)(vi)(A) will adjust
automatically each year, based on the
year-to-year change in the average of the
Consumer Price Index for Urban Wage
Earners and Clerical Workers, not
seasonally adjusted, for each 12-month
period ending in November, with
rounding to the nearest million dollars.
Unlike the asset threshold in
§ 1026.35(b)(2)(iii) and the other
thresholds in § 1026.35(b)(2)(vi),
affiliates are not considered in
calculating compliance with this
threshold. The Bureau will publish
notice of the asset threshold each year
by amending this comment. For
calendar year 2023, the asset threshold
is $11,374,000,000. A creditor that is an
insured depository institution or
insured credit union that during
calendar year 2022 had assets of
$11,374,000,000 or less on December 31,
2022, satisfies this criterion for purposes
of any loan consummated in 2023 and
for purposes of any loan secured by a
first lien on a principal dwelling of a
consumer consummated in 2024 for
which the application was received
before April 1, 2024. For historical
purposes:
1. For calendar year 2021, the asset
threshold was $10,000,000,000.
Creditors that had total assets of
10,000,000,000 or less on December 31,
2020, satisfied this criterion for
purposes of any loan consummated in
2021 and for purposes of any loan
secured by a first lien on a principal
dwelling of a consumer consummated
in 2022 for which the application was
received before April 1, 2022.
2. For calendar year 2022, the asset
threshold was $10,473,000,000.
Creditors that had total assets of
$10,473,000,000 or less on December 31,
2021, satisfied this criterion for
purposes of any loan consummated in
2022 and for purposes of any loan
secured by a first lien on a principal
dwelling of a consumer consummated
in 2023 for which the application was
received before April 1, 2023.
Laura Galban,
Federal Register Liaison, Consumer Financial
Protection Bureau.
[FR Doc. 2022–28439 Filed 12–29–22; 8:45 am]
BILLING CODE 4810–AM–P
PO 00000
Frm 00007
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80439
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2022–1238; Project
Identifier MCAI–2022–00741–T; Amendment
39–22290; AD 2022–27–05]
RIN 2120–AA64
Airworthiness Directives; Dassault
Aviation Airplanes
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule.
AGENCY:
The FAA is superseding
Airworthiness Directive (AD) 2022–09–
15, which applied to all Dassault
Aviation Model FALCON 2000 and
FALCON 2000EX airplanes. AD 2022–
09–15 required relocating affected
servo-valves and revising the existing
airplane flight manual (AFM) to provide
temporary information necessary to
operate airplanes fitted with at least one
affected brake servo-valve. AD 2022–09–
15 also limited or prohibited the
installation of affected brake servovalves. This AD was prompted by a
determination that replacing certain
brake servo-valves is necessary to
address the unsafe condition. This AD
continues to require the actions in AD
2022–09–15, including the parts
installation limitation or prohibition,
and also requires replacing an affected
part with a serviceable part, as specified
in a European Union Aviation Safety
Agency (EASA) AD, which is
incorporated by reference (IBR). The
FAA is issuing this AD to address the
unsafe condition on these products.
DATES: This AD is effective February 3,
2023.
The Director of the Federal Register
approved the incorporation by reference
of a certain publication listed in this AD
as of May 31, 2022 (87 FR 29217, May
13, 2022).
ADDRESSES:
AD Docket: You may examine the AD
docket at regulations.gov under Docket
No. FAA–2022–1238; or in person at
Docket Operations between 9 a.m. and
5 p.m., Monday through Friday, except
Federal holidays. The AD docket
contains this final rule, the mandatory
continuing airworthiness information
(MCAI), any comments received, and
other information. The address for
Docket Operations is U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE,
Washington, DC 20590.
Material Incorporated by Reference:
SUMMARY:
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]]>Agencies
[Federal Register Volume 87, Number 250 (Friday, December 30, 2022)]
[Rules and Regulations]
[Pages 80435-80439]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-28439]
-----------------------------------------------------------------------
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1026
Truth in Lending Act (Regulation Z) Adjustment to Asset-Size
Exemption Threshold
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Final rule; official interpretation.
-----------------------------------------------------------------------
SUMMARY: The Consumer Financial Protection Bureau (Bureau) is amending
the official commentary to its Regulation Z in order to make annual
adjustments to the asset-size thresholds exempting certain creditors
from the requirement to establish an escrow account for a higher-priced
mortgage loan (HPML). These changes reflect updates to the exemption
from the escrow requirement in the Truth in Lending Act (TILA) for
creditors that, together with their affiliates that regularly extended
covered transactions secured by first liens, had total assets of less
than $2 billion (adjusted annually for inflation). They also reflect
updates to the exemption the Bureau added, by implementing section 108
of the Economic Growth, Regulatory Relief, and Consumer Protection Act
(EGRRCPA), for certain insured depository institutions and insured
credit unions with assets of $10 billion or less (adjusted annually for
inflation). These amendments are based on the annual percentage change
in the average of the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W). Based on the 8.6 percent increase in the
average of the CPI-W for the 12-month period ending in November 2022,
the exemption threshold for creditors and their affiliates that
regularly extended covered transactions secured by first liens is
adjusted to $2.537 billion from $2.336 billion and the exemption
threshold for certain insured depository institutions and insured
credit unions with assets of $10 billion or less is adjusted to $11.374
billion from $10.473 billion.
DATES: This rule is effective on January 1, 2023.
FOR FURTHER INFORMATION CONTACT: Adrien Fernandez, Counsel, Thomas
Dowell, Senior Counsel, Office of Regulations, at (202) 435-7700. If
you require this document in an alternative electronic format, please
contact [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
Section 129D of TILA generally requires creditors to establish
escrow accounts for certain first-lien higher-priced mortgage loan
transactions. However, TILA section 129D also permits the Bureau to
exempt creditors from this higher-priced mortgage loan escrow
requirement if they meet certain requirements, including any asset-size
threshold that the Bureau may establish.
In the 2013 Escrows Final Rule,\1\ the Bureau established an asset-
size threshold of $2 billion, which would adjust automatically each
year, based on the year-to-year change in the average of the CPI-W for
each 12-month period ending in November, with rounding to the nearest
million dollars.\2\ In 2015, the Bureau revised the asset-size
threshold for small creditors and how it applies. The Bureau included
in the calculation of the asset-size threshold the assets of the
creditor's affiliates that regularly extended covered transactions
secured by first liens during the applicable period and added a grace
period to allow an otherwise eligible creditor that exceeded the asset
limit in the preceding calendar year (but not in the calendar year
before the preceding year) to continue to operate as a small creditor
with respect to transactions with applications received before April 1
of the current calendar year.\3\ For 2022, the threshold was $2.336
billion.
---------------------------------------------------------------------------
\1\ 78 FR 4726 (Jan. 22, 2013).
\2\ See 12 CFR 1026.35(b)(2)(iii)(C).
\3\ See 80 FR 59943, 59951 (Oct. 2, 2015). The Bureau also
issued an interim final rule in March 2016 to revise certain
provisions in Regulation Z to effectuate the Helping Expand Lending
Practices in Rural Communities Act's amendments to TILA (Pub. L.
114-94, section 89003, 129 Stat. 1312, 1800-01 (2015)). The rule
broadened the cohort of creditors that may be eligible under TILA
for the special provisions allowing origination of balloon-payment
qualified mortgages and balloon-payment high-cost mortgages, as well
as for the escrow exemption. See 81 FR 16074 (Mar. 25, 2016).
---------------------------------------------------------------------------
During the 12-month period ending in November 2022, the average of
the CPI-W increased by 8.6 percent. As a result, the exemption
threshold is increased to $2.537 billion for 2023. Thus, if the
creditor's assets together with the assets of its affiliates that
regularly extended first-lien covered transactions during calendar year
2022 are less than $2.537 billion on December 31, 2022, and it meets
the other requirements of Sec. 1026.35(b)(2)(iii), the creditor will
be exempt from the escrow-accounts requirement for higher-priced
mortgage loans in 2023 and will also be exempt from the escrow-accounts
requirement for higher-priced mortgage loans for purposes of any loan
consummated in 2024 with applications received before April 1, 2024.
The adjustment to the escrows asset-size exemption threshold also will
increase the threshold for small-creditor portfolio and balloon-payment
qualified mortgages under Regulation Z. The requirements for small-
creditor portfolio qualified mortgages at Sec. 1026.43(e)(5)(i)(D)
reference the asset threshold in Sec. 1026.35(b)(2)(iii)(C). Likewise,
the requirements for balloon-payment qualified mortgages at Sec.
1026.43(f)(1)(vi) reference the asset threshold in Sec.
1026.35(b)(2)(iii)(C). Under Sec. 1026.32(d)(1)(ii)(C), balloon-
payment qualified mortgages that satisfy all applicable criteria in
Sec. 1026.43(f)(1)(i) through (vi) and (f)(2), including being made by
creditors that have (together with certain affiliates) total assets
below
[[Page 80436]]
the threshold in Sec. 1026.35(b)(2)(iii)(C), are also excepted from
the prohibition on balloon payments for high-cost mortgages.
In the 2018 Economic Growth, Regulatory Relief, and Consumer
Protection Act (EGRRCPA),\4\ Congress directed the Bureau to issue
regulations to add a new exemption from TILA's escrow requirement that
exempts transactions by certain insured depository institutions and
insured credit unions.\5\ In 2021, the Bureau issued a final rule
implementing this exemption in Sec. 1026.35(b)(2)(vi) (2021 Escrows
Rule).\6\ The final rule exempted from the Regulation Z HPML escrow
requirement any loan made by an insured depository institution or
insured credit union and secured by a first lien on the principal
dwelling of a consumer if: (1) the institution has assets of $10
billion or less; (2) the institution and its affiliates originated
1,000 or fewer loans secured by a first lien on a principal dwelling
during the preceding calendar year; and (3) certain of the existing
HPML escrow exemption criteria are met. In the 2021 Escrows Rule, the
Bureau established an asset-size threshold of $10 billion or less in
Sec. 1026.35(b)(2)(vi)(A), which will adjust automatically each year,
based on the year-to-year change in the average of the CPI-W, not
seasonally adjusted, for each 12-month period ending in November, with
rounding to the nearest million dollars. Unlike the asset threshold in
Sec. 1026.35(b)(2)(iii) and the other thresholds in Sec.
1026.35(b)(2)(vi), affiliates are not considered in calculating
compliance with this asset threshold. For calendar year 2022, the asset
threshold was $10.473 billion.
---------------------------------------------------------------------------
\4\ Public Law 115-174, 132 Stat. 1296 (2018).
\5\ EGRRCPA section 108, 132 Stat. 1304-05; 15 U.S.C.
1639d(c)(2).
\6\ 86 FR 9840 (Feb. 17, 2021).
---------------------------------------------------------------------------
During the 12-month period ending in November 2022, the average of
the CPI-W increased by 8.6 percent. As a result, the exemption
threshold is increased to $11.374 billion for 2023. Thus, a creditor
that is an insured depository institution or insured credit union that
during calendar year 2022 had assets of $11.374 billion or less on
December 31, 2022, satisfies this criterion for purposes of any loan
consummated in 2023 and for purposes of any loan secured by a first
lien on a principal dwelling of a consumer consummated in 2024 for
which the application was received before April 1, 2024.
II. Procedural Requirements
A. Administrative Procedure Act
Under the Administrative Procedure Act (APA), notice and
opportunity for public comment are not required if the Bureau finds
that notice and public comment are impracticable, unnecessary, or
contrary to the public interest. 5 U.S.C. 553(b)(B). Pursuant to this
final rule, comment 35(b)(2)(iii)-1 in Regulation Z is amended to
update the exemption threshold in Sec. 1026.35(b)(2)(iii) and comment
35(b)(2)(vi)(A)-1 in Regulation Z is amended to update the exemption
threshold in Sec. 1026.35(b)(2)(vi). The amendments in this final rule
are technical and merely apply the formulae previously established in
Regulation Z for determining any adjustments to the exemption
thresholds. For these reasons, the Bureau has determined that
publishing a notice of proposed rulemaking and providing opportunity
for public comment are unnecessary. Therefore, the amendments are
adopted in final form.
Section 553(d) of the APA generally requires publication of a final
rule not less than 30 days before its effective date, except (1) a
substantive rule which grants or recognizes an exemption or relieves a
restriction; (2) interpretive rules and statements of policy; or (3) as
otherwise provided by the agency for good cause found and published
with the rule. 5 U.S.C. 553(d). At a minimum, the Bureau believes the
amendments fall under the third exception to section 553(d). The Bureau
finds that there is good cause to make the amendments effective on
January 1, 2023. The amendment in this final rule is technical and non-
discretionary, and it merely applies the method previously established
in the agency's regulations for automatic adjustments to the threshold.
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.\7\ As
noted previously, the Bureau has determined that it is unnecessary to
publish a general notice of proposed rulemaking for this final rule.
Accordingly, the RFA's requirement relating to an initial and final
regulatory flexibility analysis do not apply.
---------------------------------------------------------------------------
\7\ 5 U.S.C. 603(a), 604(a).
---------------------------------------------------------------------------
C. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995,\8\ the
Bureau reviewed this final rule. The Bureau has determined that this
rule does not create any new information collections or substantially
revise any existing collections.
---------------------------------------------------------------------------
\8\ 44 U.S.C. 3506; 5 CFR part 1320.
---------------------------------------------------------------------------
D. Congressional Review Act
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 United States Senate, the United States 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).
E. Signing Authority
Senior Advisor Brian Shearer, 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 in 12 CFR Part 1026
Advertising, Banks, banking, Consumer protection, Credit, Credit
unions, Mortgages, National banks, Reporting and recordkeeping
requirements, Savings associations, Truth-in-lending.
Authority and Issuance
For the reasons set forth above, the Bureau amends Regulation Z, 12
CFR part 1026, as set forth below:
PART 1026--TRUTH IN LENDING (REGULATION Z)
0
1. 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
2. In supplement I to part 1026, under Sec. 1026.35--Requirements for
Higher-Priced Mortgage Loans, 35(b)(2) Exemptions, Paragraphs
35(b)(2)(iii) and (vi)(A) are revised to read as follows:
Supplement I to Part 1026--Official Interpretations
* * * * *
Subpart E--Special Rules for Certain Home Mortgage Transactions
* * * * *
Section 1026.35--Requirements for Higher-Priced Mortgage Loans
* * * * *
[[Page 80437]]
35(b)(2) Exemptions.
* * * * *
Paragraph 35(b)(2)(iii).
1. Requirements for exemption. Under Sec. 1026.35(b)(2)(iii),
except as provided in Sec. 1026.35(b)(2)(v), a creditor need not
establish an escrow account for taxes and insurance for a higher-priced
mortgage loan, provided the following four conditions are satisfied
when the higher-priced mortgage loan is consummated:
i. During the preceding calendar year, or during either of the two
preceding calendar years if the application for the loan was received
before April 1 of the current calendar year, a creditor extended a
first-lien covered transaction, as defined in Sec. 1026.43(b)(1),
secured by a property located in an area that is either ``rural'' or
``underserved,'' as set forth in Sec. 1026.35(b)(2)(iv).
A. In general, whether the rural-or-underserved test is satisfied
depends on the creditor's activity during the preceding calendar year.
However, if the application for the loan in question was received
before April 1 of the current calendar year, the creditor may instead
meet the rural-or-underserved test based on its activity during the
next-to-last calendar year. This provides creditors with a grace period
if their activity meets the rural-or-underserved test (in Sec.
1026.35(b)(2)(iii)(A)) in one calendar year but fails to meet it in the
next calendar year.
B. A creditor meets the rural-or-underserved test for any higher-
priced mortgage loan consummated during a calendar year if it extended
a first-lien covered transaction in the preceding calendar year secured
by a property located in a rural-or-underserved area. If the creditor
does not meet the rural-or-underserved test in the preceding calendar
year, the creditor meets this condition for a higher-priced mortgage
loan consummated during the current calendar year only if the
application for the loan was received before April 1 of the current
calendar year and the creditor extended a first-lien covered
transaction during the next-to-last calendar year that is secured by a
property located in a rural or underserved area. The following examples
are illustrative:
1. Assume that a creditor extended during 2016 a first-lien covered
transaction that is secured by a property located in a rural or
underserved area. Because the creditor extended a first-lien covered
transaction during 2016 that is secured by a property located in a
rural or underserved area, the creditor can meet this condition for
exemption for any higher-priced mortgage loan consummated during 2017.
2. Assume that a creditor did not extend during 2016 a first-lien
covered transaction secured by a property that is located in a rural or
underserved area. Assume further that the same creditor extended during
2015 a first-lien covered transaction that is located in a rural or
underserved area. Assume further that the creditor consummates a
higher-priced mortgage loan in 2017 for which the application was
received in November 2017. Because the creditor did not extend during
2016 a first-lien covered transaction secured by a property that is
located in a rural or underserved area, and the application was
received on or after April 1, 2017, the creditor does not meet this
condition for exemption. However, assume instead that the creditor
consummates a higher-priced mortgage loan in 2017 based on an
application received in February 2017. The creditor meets this
condition for exemption for this loan because the application was
received before April 1, 2017, and the creditor extended during 2015 a
first-lien covered transaction that is located in a rural or
underserved area.
ii. The creditor and its affiliates together extended no more than
2,000 covered transactions, as defined in Sec. 1026.43(b)(1), secured
by first liens, that were sold, assigned, or otherwise transferred by
the creditor or its affiliates to another person, or that were subject
at the time of consummation to a commitment to be acquired by another
person, during the preceding calendar year or during either of the two
preceding calendar years if the application for the loan was received
before April 1 of the current calendar year. For purposes of Sec.
1026.35(b)(2)(iii)(B), a transfer of a first-lien covered transaction
to ``another person'' includes a transfer by a creditor to its
affiliate.
A. In general, whether this condition is satisfied depends on the
creditor's activity during the preceding calendar year. However, if the
application for the loan in question is received before April 1 of the
current calendar year, the creditor may instead meet this condition
based on activity during the next-to-last calendar year. This provides
creditors with a grace period if their activity falls at or below the
threshold in one calendar year but exceeds it in the next calendar
year.
B. For example, assume that in 2015 a creditor and its affiliates
together extended 1,500 loans that were sold, assigned, or otherwise
transferred by the creditor or its affiliates to another person, or
that were subject at the time of consummation to a commitment to be
acquired by another person, and 2,500 such loans in 2016. Because the
2016 transaction activity exceeds the threshold but the 2015
transaction activity does not, the creditor satisfies this condition
for exemption for a higher-priced mortgage loan consummated during 2017
if the creditor received the application for the loan before April 1,
2017, but does not satisfy this condition for a higher-priced mortgage
loan consummated during 2017 if the application for the loan was
received on or after April 1, 2017.
C. For purposes of Sec. 1026.35(b)(2)(iii)(B), extensions of
first-lien covered transactions, during the applicable time period, by
all of a creditor's affiliates, as ``affiliate'' is defined in Sec.
1026.32(b)(5), are counted toward the threshold in this section.
``Affiliate'' is defined in Sec. 1026.32(b)(5) as ``any company that
controls, is controlled by, or is under common control with another
company, as set forth in the Bank Holding Company Act of 1956 (12
U.S.C. 1841 et seq.).'' Under the Bank Holding Company Act, a company
has control over a bank or another company if it directly or indirectly
or acting through one or more persons owns, controls, or has power to
vote 25 per centum or more of any class of voting securities of the
bank or company; it controls in any manner the election of a majority
of the directors or trustees of the bank or company; or the Federal
Reserve Board determines, after notice and opportunity for hearing,
that the company directly or indirectly exercises a controlling
influence over the management or policies of the bank or company. 12
U.S.C. 1841(a)(2).
iii. As of the end of the preceding calendar year, or as of the end
of either of the two preceding calendar years if the application for
the loan was received before April 1 of the current calendar year, the
creditor and its affiliates that regularly extended covered
transactions secured by first liens, together, had total assets that
are less than the applicable annual asset threshold.
A. For purposes of Sec. 1026.35(b)(2)(iii)(C), in addition to the
creditor's assets, only the assets of a creditor's ``affiliate'' (as
defined by Sec. 1026.32(b)(5)) that regularly extended covered
transactions (as defined by Sec. 1026.43(b)(1)) secured by first
liens, are counted toward the applicable annual asset threshold. See
comment 35(b)(2)(iii)-1.ii.C for discussion of definition of
``affiliate.''
B. Only the assets of a creditor's affiliate that regularly
extended first-lien covered transactions during the
[[Page 80438]]
applicable period are included in calculating the creditor's assets.
The meaning of ``regularly extended'' is based on the number of times a
person extends consumer credit for purposes of the definition of
``creditor'' in Sec. 1026.2(a)(17). Because covered transactions are
``transactions secured by a dwelling,'' consistent with Sec.
1026.2(a)(17)(v), an affiliate regularly extended covered transactions
if it extended more than five covered transactions in a calendar year.
Also consistent with Sec. 1026.2(a)(17)(v), because a covered
transaction may be a high-cost mortgage subject to Sec. 1026.32, an
affiliate regularly extends covered transactions if, in any 12-month
period, it extends more than one covered transaction that is subject to
the requirements of Sec. 1026.32 or one or more such transactions
through a mortgage broker. Thus, if a creditor's affiliate regularly
extended first-lien covered transactions during the preceding calendar
year, the creditor's assets as of the end of the preceding calendar
year, for purposes of the asset limit, take into account the assets of
that affiliate. If the creditor, together with its affiliates that
regularly extended first-lien covered transactions, exceeded the asset
limit in the preceding calendar year--to be eligible to operate as a
small creditor for transactions with applications received before April
1 of the current calendar year--the assets of the creditor's affiliates
that regularly extended covered transactions in the year before the
preceding calendar year are included in calculating the creditor's
assets.
C. If multiple creditors share ownership of a company that
regularly extended first-lien covered transactions, the assets of the
company count toward the asset limit for a co-owner creditor if the
company is an ``affiliate,'' as defined in Sec. 1026.32(b)(5), of the
co-owner creditor. Assuming the company is not an affiliate of the co-
owner creditor by virtue of any other aspect of the definition (such as
by the company and co-owner creditor being under common control), the
company's assets are included toward the asset limit of the co-owner
creditor only if the company is controlled by the co-owner creditor,
``as set forth in the Bank Holding Company Act.'' If the co-owner
creditor and the company are affiliates (by virtue of any aspect of the
definition), the co-owner creditor counts all of the company's assets
toward the asset limit, regardless of the co-owner creditor's ownership
share. Further, because the co-owner and the company are mutual
affiliates the company also would count all of the co-owner's assets
towards its own asset limit. See comment 35(b)(2)(iii)-1.ii.C for
discussion of the definition of ``affiliate.''
D. A creditor satisfies the criterion in Sec.
1026.35(b)(2)(iii)(C) for purposes of any higher-priced mortgage loan
consummated during 2016, for example, if the creditor (together with
its affiliates that regularly extended first-lien covered transactions)
had total assets of less than the applicable asset threshold on
December 31, 2015. A creditor that (together with its affiliates that
regularly extended first-lien covered transactions) did not meet the
applicable asset threshold on December 31, 2015, satisfies this
criterion for a higher-priced mortgage loan consummated during 2016 if
the application for the loan was received before April 1, 2016, and the
creditor (together with its affiliates that regularly extended first-
lien covered transactions) had total assets of less than the applicable
asset threshold on December 31, 2014.
E. Under Sec. 1026.35(b)(2)(iii)(C), the $2,000,000,000 asset
threshold adjusts automatically each year based on the year-to-year
change in the average of the Consumer Price Index for Urban Wage
Earners and Clerical Workers, not seasonally adjusted, for each 12-
month period ending in November, with rounding to the nearest million
dollars. The Bureau will publish notice of the asset threshold each
year by amending this comment. For calendar year 2023, the asset
threshold is $2,537,000,000. A creditor that together with the assets
of its affiliates that regularly extended first-lien covered
transactions during calendar year 2022 has total assets of less than
$2,537,000,000 on December 31, 2022, satisfies this criterion for
purposes of any loan consummated in 2023 and for purposes of any loan
consummated in 2024 for which the application was received before April
1, 2024. For historical purposes:
1. For calendar year 2013, the asset threshold was $2,000,000,000.
Creditors that had total assets of less than $2,000,000,000 on December
31, 2012, satisfied this criterion for purposes of the exemption during
2013.
2. For calendar year 2014, the asset threshold was $2,028,000,000.
Creditors that had total assets of less than $2,028,000,000 on December
31, 2013, satisfied this criterion for purposes of the exemption during
2014.
3. For calendar year 2015, the asset threshold was $2,060,000,000.
Creditors that had total assets of less than $2,060,000,000 on December
31, 2014, satisfied this criterion for purposes of any loan consummated
in 2015 and, if the creditor's assets together with the assets of its
affiliates that regularly extended first-lien covered transactions
during calendar year 2014 were less than that amount, for purposes of
any loan consummated in 2016 for which the application was received
before April 1, 2016.
4. For calendar year 2016, the asset threshold was $2,052,000,000.
A creditor that together with the assets of its affiliates that
regularly extended first-lien covered transactions during calendar year
2015 had total assets of less than $2,052,000,000 on December 31, 2015,
satisfied this criterion for purposes of any loan consummated in 2016
and for purposes of any loan consummated in 2017 for which the
application was received before April 1, 2017.
5. For calendar year 2017, the asset threshold was $2,069,000,000.
A creditor that together with the assets of its affiliates that
regularly extended first-lien covered transactions during calendar year
2016 had total assets of less than $2,069,000,000 on December 31, 2016,
satisfied this criterion for purposes of any loan consummated in 2017
and for purposes of any loan consummated in 2018 for which the
application was received before April 1, 2018.
6. For calendar year 2018, the asset threshold was $2,112,000,000.
A creditor that together with the assets of its affiliates that
regularly extended first-lien covered transactions during calendar year
2017 had total assets of less than $2,112,000,000 on December 31, 2017,
satisfied this criterion for purposes of any loan consummated in 2018
and for purposes of any loan consummated in 2019 for which the
application was received before April 1, 2019.
7. For calendar year 2019, the asset threshold was $2,167,000,000.
A creditor that together with the assets of its affiliates that
regularly extended first-lien covered transactions during calendar year
2018 had total assets of less than $2,167,000,000 on December 31, 2018,
satisfied this criterion for purposes of any loan consummated in 2019
and for purposes of any loan consummated in 2020 for which the
application was received before April 1, 2020.
8. For calendar year 2020, the asset threshold was $2,202,000,000.
A creditor that together with the assets of its affiliates that
regularly extended first-lien covered transactions during calendar year
2019 had total assets of less than $2,202,000,000 on December 31, 2019,
satisfied this criterion for purposes of any loan consummated in 2020
and for purposes of any loan
[[Page 80439]]
consummated in 2021 for which the application was received before April
1, 2021.
9. For calendar year 2021, the asset threshold was $2,230,000,000.
A creditor that together with the assets of its affiliates that
regularly extended first-lien covered transactions during calendar year
2020 had total assets of less than $2,230,000,000 on December 31, 2020,
satisfied this criterion for purposes of any loan consummated in 2021
and for purposes of any loan consummated in 2022 for which the
application was received before April 1, 2022.
10. For calendar year 2022, the asset threshold was $2,336,000,000.
A creditor that together with the assets of its affiliates that
regularly extended first-lien covered transactions during calendar year
2021 had total assets of less than $2,336,000,000 on December 31, 2021,
satisfied this criterion for purposes of any loan consummated in 2022
and for purposes of any loan consummated in 2023 for which the
application was received before April 1, 2023.
iv. The creditor and its affiliates do not maintain an escrow
account for any mortgage transaction being serviced by the creditor or
its affiliate at the time the transaction is consummated, except as
provided in Sec. 1026.35(b)(2)(iii)(D)(1) and (2). Thus, the exemption
applies, provided the other conditions of Sec. 1026.35(b)(2)(iii) (or,
if applicable, the conditions for the exemption in Sec.
1026.35(b)(2)(vi)) are satisfied, even if the creditor previously
maintained escrow accounts for mortgage loans, provided it no longer
maintains any such accounts except as provided in Sec.
1026.35(b)(2)(iii)(D)(1) and (2). Once a creditor or its affiliate
begins escrowing for loans currently serviced other than those
addressed in Sec. 1026.35(b)(2)(iii)(D)(1) and (2), however, the
creditor and its affiliate become ineligible for the exemption in Sec.
1026.35(b)(2)(iii) and (vi) on higher-priced mortgage loans they make
while such escrowing continues. Thus, as long as a creditor (or its
affiliate) services and maintains escrow accounts for any mortgage
loans, other than as provided in Sec. 1026.35(b)(2)(iii)(D)(1) and
(2), the creditor will not be eligible for the exemption for any
higher-priced mortgage loan it may make. For purposes of Sec.
1026.35(b)(2)(iii) and (vi), a creditor or its affiliate ``maintains''
an escrow account only if it services a mortgage loan for which an
escrow account has been established at least through the due date of
the second periodic payment under the terms of the legal obligation.
* * * * *
Paragraph 35(b)(2)(vi)(A).
1. The asset threshold in Sec. 1026.35(b)(2)(vi)(A) will adjust
automatically each year, based on the year-to-year change in the
average of the Consumer Price Index for Urban Wage Earners and Clerical
Workers, not seasonally adjusted, for each 12-month period ending in
November, with rounding to the nearest million dollars. Unlike the
asset threshold in Sec. 1026.35(b)(2)(iii) and the other thresholds in
Sec. 1026.35(b)(2)(vi), affiliates are not considered in calculating
compliance with this threshold. The Bureau will publish notice of the
asset threshold each year by amending this comment. For calendar year
2023, the asset threshold is $11,374,000,000. A creditor that is an
insured depository institution or insured credit union that during
calendar year 2022 had assets of $11,374,000,000 or less on December
31, 2022, satisfies this criterion for purposes of any loan consummated
in 2023 and for purposes of any loan secured by a first lien on a
principal dwelling of a consumer consummated in 2024 for which the
application was received before April 1, 2024. For historical purposes:
1. For calendar year 2021, the asset threshold was $10,000,000,000.
Creditors that had total assets of 10,000,000,000 or less on December
31, 2020, satisfied this criterion for purposes of any loan consummated
in 2021 and for purposes of any loan secured by a first lien on a
principal dwelling of a consumer consummated in 2022 for which the
application was received before April 1, 2022.
2. For calendar year 2022, the asset threshold was $10,473,000,000.
Creditors that had total assets of $10,473,000,000 or less on December
31, 2021, satisfied this criterion for purposes of any loan consummated
in 2022 and for purposes of any loan secured by a first lien on a
principal dwelling of a consumer consummated in 2023 for which the
application was received before April 1, 2023.
Laura Galban,
Federal Register Liaison, Consumer Financial Protection Bureau.
[FR Doc. 2022-28439 Filed 12-29-22; 8:45 am]
BILLING CODE 4810-AM-P
