Truth in Lending (Regulation Z), 82938-82944 [2024-23275]
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Federal Register / Vol. 89, No. 199 / Tuesday, October 15, 2024 / Rules and Regulations
organization such as a corporation or a
government agency or instrumentality. Such
a lease is not covered by the regulation even
if the leased property is used (by an
employee, for example) primarily for
personal, family or household purposes, or is
guaranteed by or subsequently assigned to a
natural person.
7. Leases of personal property incidental to
a service. The following leases of personal
property are deemed incidental to a service
and thus are not subject to the regulation:
i. Home entertainment systems requiring
the consumer to lease equipment that enables
a television to receive the transmitted
programming.
ii. Security alarm systems requiring the
installation of leased equipment intended to
monitor unlawful entries into a home and in
some cases to provide fire protection.
iii. Propane gas service where the
consumer must lease a propane tank to
receive the service.
8. Safe deposit boxes. The lease of a safe
deposit box is not a consumer lease under
§ 1013.2(e).
9. Threshold amount. A consumer lease is
exempt from the requirements of this part if
the total contractual obligation exceeds the
threshold amount in effect at the time of
consummation. The threshold amount in
effect during a particular time period is the
amount stated in comment 2(e)–1 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 2(e)–11
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. If a
consumer lease is exempt from the
requirements of this part because the total
contractual obligation exceeds the threshold
amount in effect at the time of
consummation, the lease remains exempt
regardless of a subsequent increase in the
threshold amount.
10. 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
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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.
11. Threshold. For purposes of
§ 1013.2(e)(1), the threshold amount in effect
during a particular period is the amount
stated in the following for that period.
i. Prior to July 21, 2011, the threshold
amount is $25,000.
ii. From July 21, 2011, through December
31, 2011, the threshold amount is $50,000.
iii. From January 1, 2012, through
December 31, 2012, the threshold amount is
$51,800.
iv. From January 1, 2013, through
December 31, 2013, the threshold amount is
$53,000.
v. From January 1, 2014, through December
31, 2014, the threshold amount is $53,500.
vi. From January 1, 2015, through
December 31, 2015, the threshold amount is
$54,600.
vii. From January 1, 2016, through
December 31, 2016, the threshold amount is
$54,600.
viii. From January 1, 2017, through
December 31, 2017, the threshold amount is
$54,600.
ix. From January 1, 2018, through
December 31, 2018, the threshold amount is
$55,800.
x. From January 1, 2019, through December
31, 2019, the threshold amount is $57,200.
xi. From January 1, 2020, through
December 31, 2020, the threshold amount is
$58,300.
xii. From January 1, 2021, through
December 31, 2021, the threshold amount is
$58,300.
xiii. From January 1, 2022, through
December 31, 2022, the threshold amount is
$61,000.
xiv. From January 1, 2023, through
December 31, 2023, the threshold amount is
$66,400.
xv. From January 1, 2024, through
December 31, 2024, the threshold amount is
$69,500.
xvi. From January 1, 2025, through
December 31, 2025, the threshold amount is
$71,900.
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By order of the Board of Governors of the
Federal Reserve System, acting through the
Secretary of the Board under delegated
authority.
Benjamin W. McDonough,
Deputy Secretary of the Board.
Brian Shearer,
Assistant Director, Office of Policy Planning
and Strategy, Consumer Financial Protection
Bureau.
[FR Doc. 2024–23276 Filed 10–11–24; 8:45 am]
BILLING CODE 6210–01–P; 4810–AM–P
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FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Docket No. R–1843]
RIN 7100–AG 84
CONSUMER FINANCIAL PROTECTION
BUREAU
12 CFR Part 1026
Truth in Lending (Regulation Z)
Board of Governors of the
Federal Reserve System (Board) and
Consumer Financial Protection Bureau
(CFPB).
ACTION: Final rules, official
interpretations.
AGENCY:
The Board and the CFPB
(collectively, Agencies) are publishing
final rules amending the official
interpretations for the Agencies’
regulations that implement the Truth in
Lending Act (TILA). The Dodd-Frank
Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act)
amended TILA by requiring that the
dollar threshold for exempt consumer
credit transactions be adjusted annually
by the annual percentage increase in the
Consumer Price Index for Urban Wage
Earners and Clerical Workers (CPI–W).
Based on the annual percentage increase
in the CPI–W as of June 1, 2024, the
exemption threshold will increase from
$69,500 to $71,900 effective January 1,
2025. Because the Dodd-Frank Act also
requires similar adjustments in the
Consumer Leasing Act’s threshold for
exempt consumer leases, the Agencies
are making similar amendments to each
of their respective regulations
implementing the Consumer Leasing
Act elsewhere in the Rules section of
this issue of the Federal Register.
DATES: This final rule is effective
January 1, 2025.
FOR FURTHER INFORMATION CONTACT:
Board: Vivian W. Wong, Senior
Counsel, Division of Consumer and
Community Affairs, Board of Governors
of the Federal Reserve System, at (202)
452–3667. For users of TTY–TRS, please
call 711 from any telephone, anywhere
in the United States.
CFPB: George Karithanom, Regulatory
Implementation & Guidance Program
Analyst, Office of Regulations, at 202–
435–7700 or at: https://reginquiries.
consumerfinance.gov/. If you require
this document in an alternative
electronic format, please contact CFPB_
Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:
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I. Background
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The Dodd-Frank Act increased the
threshold in TILA for exempt consumer
credit transactions,1 and the threshold
in the Consumer Leasing Act (CLA) for
exempt consumer leases, from $25,000
to $50,000, effective July 21, 2011.2 In
addition, the Dodd-Frank Act requires
that, on and after December 31, 2011,
these thresholds be adjusted annually
for inflation by the annual percentage
increase in the CPI–W, as published by
the Bureau of Labor Statistics.3 In April
2011, the Board issued a final rule
amending Regulation Z (which
implements TILA) consistent with these
provisions of the Dodd-Frank Act, along
with a similar final rule amending
Regulation M (which implements the
CLA) (collectively, Board Final
Threshold Rules).4
Title X of the Dodd-Frank Act
transferred rulemaking authority for a
number of consumer financial
protection laws from the Board to the
CFPB, effective July 21, 2011. In
connection with this transfer of
rulemaking authority, the CFPB issued
its own Regulation Z implementing
TILA, 12 CFR part 1026, substantially
duplicating the Board’s Regulation Z.5
Although the CFPB has the authority to
issue rules to implement TILA for most
entities, the Board retains authority to
issue rules under TILA for certain motor
vehicle dealers covered by section
1029(a) of the Dodd-Frank Act, and the
Board’s Regulation Z continues to apply
to those entities.6
1 Although consumer credit transactions above
the threshold are generally exempt, loans secured
by real property or by personal property used or
expected to be used as the principal dwelling of a
consumer and private education loans are covered
by TILA regardless of the loan amount. See 12 CFR
226.3(b)(1)(i) (Board) and 12 CFR 1026.3(b)(1)(i)
(CFPB).
2 Public Law 111–203, sec. 1100E, 124 Stat. 1376,
2111 (2010).
3 Id.
4 76 FR 18354 (Apr. 4, 2011); 76 FR 18349 (Apr.
4, 2011).
5 See 76 FR 79768 (Dec. 22, 2011); 81 FR 25323
(Apr. 28, 2016).
6 Section 1029(a) of the Dodd-Frank Act states:
‘‘Except as permitted in subsection (b), the Bureau
may not exercise any rulemaking, supervisory,
enforcement, or any other authority . . . over a
motor vehicle dealer that is predominantly engaged
in the sale and servicing of motor vehicles, the
leasing and servicing of motor vehicles, or both.’’
12 U.S.C. 5519(a). Section 1029(b) of the DoddFrank Act provides that ‘‘[s]ubsection (a) shall not
apply to any person, to the extent that such
person—(1) provides consumers with any services
related to residential or commercial mortgages or
self-financing transactions involving real property;
(2) operates a line of business—(A) that involves the
extension of retail credit or retail leases involving
motor vehicles; and (B) in which—(i) the extension
of retail credit or retail leases are provided directly
to consumers; and (ii) the contract governing such
extension of retail credit or retail leases is not
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The Agencies’ regulations,7 and their
accompanying official interpretations,
provide that the exemption threshold
will be adjusted annually effective
January 1 of each year based on any
annual percentage increase in the CPI–
W that was in effect on the preceding
June 1. They further provide that any
increase in the threshold amount will be
rounded to the nearest $100 increment.
For example, if the annual percentage
increase in the 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 $900.8 Since 2011,
the Agencies have adjusted the
Regulation Z exemption threshold
annually, in accordance with these
rules.
On November 30, 2016, the Agencies
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, as contemplated by section
1100E(b) of the Dodd-Frank Act, the
values for the exemption threshold keep
pace with the CPI–W (Regulation Z
Adjustment Calculation Rule).9 The
Regulation Z Adjustment Calculation
Rule memorialized the policy that, if
there is no annual percentage increase
in the CPI–W, the Agencies will not
adjust the exemption threshold from the
prior year. The Regulation Z 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
routinely assigned to an unaffiliated third party
finance or leasing source; or (3) offers or provides
a consumer financial product or service not
involving or related to the sale, financing, leasing,
rental, repair, refurbishment, maintenance, or other
servicing of motor vehicles, motor vehicle parts, or
any related or ancillary product or service.’’ 12
U.S.C. 5519(b).
7 12 CFR 226.3(b)(1)(ii) (Board) and 12 CFR
1026.3(b)(1)(ii) (CFPB).
8 See comments 3(b)–1 in supplement I of 12 CFR
parts 226 and 1026.
9 See 81 FR 86260 (Nov. 30, 2016).
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82939
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. 2025 Adjustment and Official
Interpretations Revision
Effective January 1, 2025, the
exemption threshold amount is
increased from $69,500 to $71,900. This
amount is based on the CPI–W in effect
on June 1, 2024, which was reported on
May 15, 2024 (based on April 2024
data).10 The CPI–W is a subset of the
CPI–U index (based on all urban
consumers) and represents
approximately 30 percent of the U.S.
population. The CPI–W reported on
May 15, 2024, reflects a 3.4 percent
increase in the CPI–W from April 2023
to April 2024. Accordingly, the 3.4
percent increase in the CPI–W from
April 2023 to April 2024 results in an
exemption threshold amount of $71,900,
after rounding. The Agencies are
revising the official interpretations to
their respective regulations to add new
comment 3(b)–3.xvi to state that, from
January 1, 2025, through December 31,
2025, the threshold amount is $71,900.
These revisions are effective January 1,
2025.
III. Regulatory Analysis
Administrative Procedure Act
Under the Administrative Procedure
Act, notice and opportunity for public
comment are not required if the
Agencies find 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 set forth in the Board Final
Threshold Rules and the Regulation Z
Adjustment Calculation Rule. For these
reasons, the Agencies 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,
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, 2024, were reported
on May 15, 2024, and reflect economic conditions
in April 2024.
11 5 U.S.C. 553(b)(B).
12 5 U.S.C. 603(a), 604(a).
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the Agencies have determined that it is
unnecessary to publish a general notice
of proposed rulemaking for this joint
final rule. Accordingly, the RFA’s
requirements relating to an initial and
final regulatory flexibility analysis do
not apply.
Paperwork Reduction Act
The Agencies reviewed this final rule
in accordance with the Paperwork
Reduction Act of 1995.13 The Agencies
have determined that this rule does not
create any new information collections
or substantially revise any existing
collections.
CFPB Congressional Review Act
Statement
Pursuant to the Congressional Review
Act (5 U.S.C. 801 et seq.), the CFPB 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).
List of Subjects
12 CFR Part 226
Advertising, Consumer protection,
Federal Reserve System, Reporting and
recordkeeping requirements, Truth-inlending.
12 CFR Part 1026
Advertising, Banks, Banking,
Consumer protection, Credit, Credit
unions, Mortgages, National banks,
Reporting and recordkeeping
requirements, Savings associations,
Truth-in-lending.
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)
1. The authority citation for part 226
continues to read as follows:
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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.
2. In supplement I to part 226, under
Section 226.3—Exempt Transactions,
revise 3(b) Credit over applicable
threshold amount, to read as follows:
■
13 44
U.S.C. 3506; 5 CFR part 1320.
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Supplement I to Part 226—Official Staff
Interpretations
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Section 226.3—Exempt Transactions
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3(b) Credit over applicable threshold
amount.
1. Threshold amount. For purposes of
§ 226.3(b), the threshold amount in effect
during a particular period is the amount
stated in comment 3(b)–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 3(b)–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 § 226.3(b),
the threshold amount in effect during a
particular period is the amount stated in the
following for that period.
i. Prior to July 21, 2011, the threshold
amount is $25,000.
ii. From July 21, 2011, through December
31, 2011, the threshold amount is $50,000.
iii. From January 1, 2012, through
December 31, 2012, the threshold amount is
$51,800.
iv. From January 1, 2013, through
December 31, 2013, the threshold amount is
$53,000.
v. From January 1, 2014, through December
31, 2014, the threshold amount is $53,500.
vi. From January 1, 2015, through
December 31, 2015, the threshold amount is
$54,600.
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vii. From January 1, 2016, through
December 31, 2016, the threshold amount is
$54,600.
viii. From January 1, 2017, through
December 31, 2017, the threshold amount is
$54,600.
ix. From January 1, 2018, through
December 31, 2018, the threshold amount is
$55,800.
x. From January 1, 2019, through December
31, 2019, the threshold amount is $57,200.
xi. From January 1, 2020, through
December 31, 2020, the threshold amount is
$58,300.
xii. From January 1, 2021, through
December 31, 2021, the threshold amount is
$58,300.
xiii. From January 1, 2022, through
December 31, 2022, the threshold amount is
$61,000.
xiv. From January 1, 2023, through
December 31, 2023, the threshold amount is
$66,400.
xv. From January 1, 2024, through
December 31, 2024, the threshold amount is
$69,500.
xvi. From January 1, 2025, through
December 31, 2025, the threshold amount is
$71,900.
4. Open-end credit.
i. Qualifying for exemption. An open-end
account is exempt under § 226.3(b) (unless
secured by any real property, or by personal
property used or expected to be used as the
consumer’s principal dwelling) if either of
the following conditions is met:
A. The creditor makes an initial extension
of credit at or after account opening that
exceeds the threshold amount in effect at the
time the initial extension is made. If a
creditor makes an initial extension of credit
after account opening that does not exceed
the threshold amount in effect at the time the
extension is made, the creditor must have
satisfied all of the applicable requirements of
this part from the date the account was
opened (or earlier, if applicable), including
but not limited to the requirements of § 226.6
(account-opening disclosures), § 226.7
(periodic statements), § 226.52 (limitations
on fees), and § 226.55 (limitations on
increasing annual percentages rates, fees, and
charges). For example:
(1) Assume that the threshold amount in
effect on January 1 is $50,000. On February
1, an account is opened but the creditor does
not make an initial extension of credit at that
time. On July 1, the creditor makes an initial
extension of credit of $60,000. In this
circumstance, no requirements of this part
apply to the account.
(2) Assume that the threshold amount in
effect on January 1 is $50,000. On February
1, an account is opened but the creditor does
not make an initial extension of credit at that
time. On July 1, the creditor makes an initial
extension of credit of $50,000 or less. In this
circumstance, the account is not exempt, and
the creditor must have satisfied all of the
applicable requirements of this part from the
date the account was opened (or earlier, if
applicable).
B. The creditor makes a firm written
commitment at account opening to extend a
total amount of credit in excess of the
threshold amount in effect at the time the
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account is opened with no requirement of
additional credit information for any
advances on the account (except as permitted
from time to time with respect to open-end
accounts pursuant to § 226.2(a)(20)).
ii. Subsequent changes generally.
Subsequent changes to an open-end account
or the threshold amount may result in the
account no longer qualifying for the
exemption in § 226.3(b). In these
circumstances, the creditor must begin to
comply with all of the applicable
requirements of this part within a reasonable
period of time after the account ceases to be
exempt. Once an account ceases to be
exempt, the requirements of this part apply
to any balances on the account. The creditor,
however, is not required to comply with the
requirements of this part with respect to the
period of time during which the account was
exempt. For example, if an open-end credit
account ceases to be exempt, the creditor
must within a reasonable period of time
provide the disclosures required by § 226.6
reflecting the current terms of the account
and begin to provide periodic statements
consistent with § 226.7. However, the
creditor is not required to disclose fees or
charges imposed while the account was
exempt. Furthermore, if the creditor provided
disclosures consistent with the requirements
of this part while the account was exempt,
it is not required to provide disclosures
required by § 226.6 reflecting the current
terms of the account. See also comment 3(b)–
6.
iii. Subsequent changes when exemption is
based on initial extension of credit. If a
creditor makes an initial extension of credit
that exceeds the threshold amount in effect
at that time, the open-end account remains
exempt under § 226.3(b) regardless of a
subsequent increase in the threshold amount,
including an increase pursuant to
§ 226.3(b)(1)(ii) as a result of an increase in
the CPI–W. Furthermore, in these
circumstances, the account remains exempt
even if there are no further extensions of
credit, subsequent extensions of credit do not
exceed the threshold amount, the account
balance is subsequently reduced below the
threshold amount (such as through
repayment of the extension), or the credit
limit for the account is subsequently reduced
below the threshold amount. However, if the
initial extension of credit on an account does
not exceed the threshold amount in effect at
the time of the extension, the account is not
exempt under § 226.3(b) even if a subsequent
extension exceeds the threshold amount or if
the account balance later exceeds the
threshold amount (for example, due to the
subsequent accrual of interest).
iv. Subsequent changes when exemption is
based on firm commitment.
A. General. If a creditor makes a firm
written commitment at account opening to
extend a total amount of credit that exceeds
the threshold amount in effect at that time,
the open-end account remains exempt under
§ 226.3(b) regardless of a subsequent increase
in the threshold amount pursuant to
§ 226.3(b)(1)(ii) as a result of an increase in
the CPI–W. However, see comment 3(b)–8
with respect to the increase in the threshold
amount from $25,000 to $50,000. If an open-
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end account is exempt under § 226.3(b) based
on a firm commitment to extend credit, the
account remains exempt even if the amount
of credit actually extended does not exceed
the threshold amount. In contrast, if the firm
commitment does not exceed the threshold
amount at account opening, the account is
not exempt under § 226.3(b) even if the
account balance later exceeds the threshold
amount. In addition, if a creditor reduces a
firm commitment, the account ceases to be
exempt unless the reduced firm commitment
exceeds the threshold amount in effect at the
time of the reduction. For example:
(1) Assume that, at account opening in year
one, the threshold amount in effect is
$50,000 and the account is exempt under
§ 226.3(b) based on the creditor’s firm
commitment to extend $55,000 in credit. If
during year one the creditor reduces its firm
commitment to $53,000, the account remains
exempt under § 226.3(b). However, if during
year one the creditor reduces its firm
commitment to $40,000, the account is no
longer exempt under § 226.3(b).
(2) Assume that, at account opening in year
one, the threshold amount in effect is
$50,000 and the account is exempt under
§ 226.3(b) based on the creditor’s firm
commitment to extend $55,000 in credit. If
the threshold amount is $56,000 on January
1 of year six as a result of increases in the
CPI–W, the account remains exempt.
However, if the creditor reduces its firm
commitment to $54,000 on July 1 of year six,
the account ceases to be exempt under
§ 226.3(b).
B. Initial extension of credit. If an open-end
account qualifies for a § 226.3(b) exemption
at account opening based on a firm
commitment, that account may also
subsequently qualify for a § 226.3(b)
exemption based on an initial extension of
credit. However, that initial extension must
be a single advance in excess of the threshold
amount in effect at the time the extension is
made. In addition, the account must continue
to qualify for an exemption based on the firm
commitment until the initial extension of
credit is made. For example:
(1) Assume that, at account opening in year
one, the threshold amount in effect is
$50,000 and the account is exempt under
§ 226.3(b) based on the creditor’s firm
commitment to extend $55,000 in credit. The
account is not used for an extension of credit
during year one. On January 1 of year two,
the threshold amount is increased to $51,000
pursuant to § 226.3(b)(1)(ii) as a result of an
increase in the CPI–W. On July 1 of year two,
the consumer uses the account for an initial
extension of $52,000. As a result of this
extension of credit, the account remains
exempt under § 226.3(b) even if, after July 1
of year two, the creditor reduces the firm
commitment to $51,000 or less.
(2) Same facts as in paragraph 4.iv.B(1) of
this section except that the consumer uses
the account for an initial extension of
$30,000 on July 1 of year two and for an
extension of $22,000 on July 15 of year two.
In these circumstances, the account is not
exempt under § 226.3(b) based on the
$30,000 initial extension of credit because
that extension did not exceed the applicable
threshold amount ($51,000), although the
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account remains exempt based on the firm
commitment to extend $55,000 in credit.
(3) Same facts as in paragraph 4.iv.B(1) of
this section except that, on April 1 of year
two, the creditor reduces the firm
commitment to $50,000, which is below the
$51,000 threshold then in effect. Because the
account ceases to qualify for a § 226.3(b)
exemption on April 1 of year two, the
account does not qualify for a § 226.3(b)
exemption based on a $52,000 initial
extension of credit on July 1 of year two.
5. Closed-end credit.
i. Qualifying for exemption. A closed-end
loan is exempt under § 226.3(b) (unless the
extension of credit is secured by any real
property, or by personal property used or
expected to be used as the consumer’s
principal dwelling; or is a private education
loan as defined in § 226.46(b)(5)), if either of
the following conditions is met.
A. The creditor makes an extension of
credit at consummation that exceeds the
threshold amount in effect at the time of
consummation. In these circumstances, the
loan remains exempt under § 226.3(b) even if
the amount owed is subsequently reduced
below the threshold amount (such as through
repayment of the loan).
B. The creditor makes a commitment at
consummation to extend a total amount of
credit in excess of the threshold amount in
effect at the time of consummation. In these
circumstances, the loan remains exempt
under § 226.3(b) even if the total amount of
credit extended does not exceed the
threshold amount.
ii. Subsequent changes. If a creditor makes
a closed-end extension of credit or
commitment to extend closed-end credit that
exceeds the threshold amount in effect at the
time of consummation, the closed-end loan
remains exempt under § 226.3(b) regardless
of a subsequent increase in the threshold
amount. However, a closed-end loan is not
exempt under § 226.3(b) merely because it is
used to satisfy and replace an existing
exempt loan, unless the new extension of
credit is itself exempt under the applicable
threshold amount. For example, assume a
closed-end loan that qualified for a § 226.3(b)
exemption at consummation in year one is
refinanced in year ten and that the new loan
amount is less than the threshold amount in
effect in year ten. In these circumstances, the
creditor must comply with all of the
applicable requirements of this part with
respect to the year ten transaction if the
original loan is satisfied and replaced by the
new loan, which is not exempt under
§ 226.3(b). See also comment 3(b)–6.
6. Addition of a security interest in real
property or a dwelling after account opening
or consummation.
i. Open-end credit. For open-end accounts,
if, after account opening, a security interest
is taken in real property, or in personal
property used or expected to be used as the
consumer’s principal dwelling, a previously
exempt account ceases to be exempt under
§ 226.3(b) and the creditor must begin to
comply with all of the applicable
requirements of this part within a reasonable
period of time. See comment 3(b)–4.ii. If a
security interest is taken in the consumer’s
principal dwelling, the creditor must also
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give the consumer the right to rescind the
security interest consistent with § 226.15.
ii. Closed-end credit. For closed-end loans,
if, after consummation, a security interest is
taken in any real property, or in personal
property used or expected to be used as the
consumer’s principal dwelling, an exempt
loan remains exempt under § 226.3(b).
However, the addition of a security interest
in the consumer’s principal dwelling is a
transaction for purposes of § 226.23, and the
creditor must give the consumer the right to
rescind the security interest consistent with
that section. See § 226.23(a)(1) and the
accompanying commentary. In contrast, if a
closed-end loan that is exempt under
§ 226.3(b) is satisfied and replaced by a loan
that is secured by any real property, or by
personal property used or expected to be
used as the consumer’s principal dwelling,
the new loan is not exempt under § 226.3(b)
and the creditor must comply with all of the
applicable requirements of this part. See
comment 3(b)–5.
7. Application to extensions secured by
mobile homes. Because a mobile home can be
a dwelling under § 226.2(a)(19), the
exemption in § 226.3(b) does not apply to a
credit extension secured by a mobile home
that is used or expected to be used as the
principal dwelling of the consumer. See
comment 3(b)–6.
8. Transition rule for open-end accounts
exempt prior to July 21, 2011. Section
226.3(b)(2) applies only to open-end accounts
opened prior to July 21, 2011. Section
226.3(b)(2) does not apply if a security
interest is taken by the creditor in any real
property, or in personal property used or
expected to be used as the consumer’s
principal dwelling. If, on July 20, 2011, an
open-end account is exempt under § 226.3(b)
based on a firm commitment to extend credit
in excess of $25,000, the account remains
exempt under § 226.3(b)(2) until December
31, 2011 (unless the firm commitment is
reduced to $25,000 or less). If the firm
commitment is increased on or before
December 31, 2011, to an amount in excess
of $50,000, the account remains exempt
under § 226.3(b)(1) regardless of subsequent
increases in the threshold amount as a result
of increases in the CPI–W. If the firm
commitment is not increased on or before
December 31, 2011, to an amount in excess
of $50,000, the account ceases to be exempt
under § 226.3(b) based on a firm commitment
to extend credit. For example:
i. Assume that, on July 20, 2011, the
account is exempt under § 226.3(b) based on
the creditor’s firm commitment to extend
$30,000 in credit. On November 1, 2011, the
creditor increases the firm commitment on
the account to $55,000. In these
circumstances, the account remains exempt
under § 226.3(b)(1) regardless of subsequent
increases in the threshold amount as a result
of increases in the CPI–W.
ii. Same facts as paragraph 8.i. of this
section except, on November 1, 2011, the
creditor increases the firm commitment on
the account to $40,000. In these
circumstances, the account ceases to be
exempt under § 226.3(b)(2) after December
31, 2011, and the creditor must begin to
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comply with the applicable requirements of
this part.
*
*
*
*
*
CONSUMER FINANCIAL PROTECTION
BUREAU
Authority and Issuance
For the reasons set forth in the
preamble, the CFPB amends Regulation
Z, 12 CFR part 1026, as set forth below:
PART 1026—TRUTH IN LENDING
(REGULATION Z)
3. 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.
4. In supplement I to part 1026, under
Section 1026.3—Exempt Transactions,
revise 3(b)—Credit Over Applicable
Threshold Amount to read as follows:
■
Supplement I to Part 1026—Official
Interpretations
*
*
*
*
*
Section 1026.3—Exempt Transactions
*
*
*
*
*
3(b) Credit Over Applicable Threshold
Amount
1. Threshold amount. For purposes of
§ 1026.3(b), the threshold amount in effect
during a particular period is the amount
stated in comment 3(b)–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 3(b)–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
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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 § 1026.3(b),
the threshold amount in effect during a
particular period is the amount stated in the
following for that period.
i. Prior to July 21, 2011, the threshold
amount is $25,000.
ii. From July 21, 2011, through December
31, 2011, the threshold amount is $50,000.
iii. From January 1, 2012, through
December 31, 2012, the threshold amount is
$51,800.
iv. From January 1, 2013, through
December 31, 2013, the threshold amount is
$53,000.
v. From January 1, 2014, through December
31, 2014, the threshold amount is $53,500.
vi. From January 1, 2015, through
December 31, 2015, the threshold amount is
$54,600.
vii. From January 1, 2016, through
December 31, 2016, the threshold amount is
$54,600.
viii. From January 1, 2017, through
December 31, 2017, the threshold amount is
$54,600.
ix. From January 1, 2018, through
December 31, 2018, the threshold amount is
$55,800.
x. From January 1, 2019, through December
31, 2019, the threshold amount is $57,200.
xi. From January 1, 2020, through
December 31, 2020, the threshold amount is
$58,300.
xii. From January 1, 2021, through
December 31, 2021, the threshold amount is
$58,300. xiii. From January 1, 2022, through
December 31, 2022, the threshold amount is
$61,000.
xiv. From January 1, 2023, through
December 31, 2023, the threshold amount is
$66,400.
xv. From January 1, 2024, through
December 31, 2024, the threshold amount is
$69,500.
xvi. From January 1, 2025, through
December 31, 2025, the threshold amount is
$71,900.
4. Open-end credit.
i. Qualifying for exemption. An open-end
account is exempt under § 1026.3(b) (unless
secured by real property, or by personal
property used or expected to be used as the
consumer’s principal dwelling) if either of
the following conditions is met:
A. The creditor makes an initial extension
of credit at or after account opening that
exceeds the threshold amount in effect at the
time the initial extension is made. If a
creditor makes an initial extension of credit
after account opening that does not exceed
the threshold amount in effect at the time the
extension is made, the creditor must have
satisfied all of the applicable requirements of
this part from the date the account was
opened (or earlier, if applicable), including
but not limited to the requirements of
§ 1026.6 (account-opening disclosures),
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§ 1026.7 (periodic statements), § 1026.52
(limitations on fees), and § 1026.55
(limitations on increasing annual percentage
rates, fees, and charges). For example:
1. Assume that the threshold amount in
effect on January 1 is $50,000. On February
1, an account is opened but the creditor does
not make an initial extension of credit at that
time. On July 1, the creditor makes an initial
extension of credit of $60,000. In this
circumstance, no requirements of this part
apply to the account.
2. Assume that the threshold amount in
effect on January 1 is $50,000. On February
1, an account is opened but the creditor does
not make an initial extension of credit at that
time. On July 1, the creditor makes an initial
extension of credit of $50,000 or less. In this
circumstance, the account is not exempt, and
the creditor must have satisfied all of the
applicable requirements of this part from the
date the account was opened (or earlier, if
applicable).
B. The creditor makes a firm written
commitment at account opening to extend a
total amount of credit in excess of the
threshold amount in effect at the time the
account is opened with no requirement of
additional credit information for any
advances on the account (except as permitted
from time to time with respect to open-end
accounts pursuant to § 1026.2(a)(20)).
ii. Subsequent changes generally.
Subsequent changes to an open-end account
or the threshold amount may result in the
account no longer qualifying for the
exemption in § 1026.3(b). In these
circumstances, the creditor must begin to
comply with all of the applicable
requirements of this part within a reasonable
period of time after the account ceases to be
exempt. Once an account ceases to be
exempt, the requirements of this part apply
to any balances on the account. The creditor,
however, is not required to comply with the
requirements of this part with respect to the
period of time during which the account was
exempt. For example, if an open-end credit
account ceases to be exempt, the creditor
must within a reasonable period of time
provide the disclosures required by § 1026.6
reflecting the current terms of the account
and begin to provide periodic statements
consistent with § 1026.7. However, the
creditor is not required to disclose fees or
charges imposed while the account was
exempt. Furthermore, if the creditor provided
disclosures consistent with the requirements
of this part while the account was exempt,
it is not required to provide disclosures
required by § 1026.6 reflecting the current
terms of the account. See also comment 3(b)–
6.
iii. Subsequent changes when exemption is
based on initial extension of credit. If a
creditor makes an initial extension of credit
that exceeds the threshold amount in effect
at that time, the open-end account remains
exempt under § 1026.3(b) regardless of a
subsequent increase in the threshold amount,
including an increase pursuant to
§ 1026.3(b)(1)(ii) as a result of an increase in
the CPI–W. Furthermore, in these
circumstances, the account remains exempt
even if there are no further extensions of
credit, subsequent extensions of credit do not
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exceed the threshold amount, the account
balance is subsequently reduced below the
threshold amount (such as through
repayment of the extension), or the credit
limit for the account is subsequently reduced
below the threshold amount. However, if the
initial extension of credit on an account does
not exceed the threshold amount in effect at
the time of the extension, the account is not
exempt under § 1026.3(b) even if a
subsequent extension exceeds the threshold
amount or if the account balance later
exceeds the threshold amount (for example,
due to the subsequent accrual of interest).
iv. Subsequent changes when exemption is
based on firm commitment.
A. General. If a creditor makes a firm
written commitment at account opening to
extend a total amount of credit that exceeds
the threshold amount in effect at that time,
the open-end account remains exempt under
§ 1026.3(b) regardless of a subsequent
increase in the threshold amount pursuant to
§ 1026.3(b)(1)(ii) as a result of an increase in
the CPI–W. However, see comment 3(b)–8
with respect to the increase in the threshold
amount from $25,000 to $50,000. If an openend account is exempt under § 1026.3(b)
based on a firm commitment to extend credit,
the account remains exempt even if the
amount of credit actually extended does not
exceed the threshold amount. In contrast, if
the firm commitment does not exceed the
threshold amount at account opening, the
account is not exempt under § 1026.3(b) even
if the account balance later exceeds the
threshold amount. In addition, if a creditor
reduces a firm commitment, the account
ceases to be exempt unless the reduced firm
commitment exceeds the threshold amount
in effect at the time of the reduction. For
example:
1. Assume that, at account opening in year
one, the threshold amount in effect is
$50,000 and the account is exempt under
§ 1026.3(b) based on the creditor’s firm
commitment to extend $55,000 in credit. If
during year one the creditor reduces its firm
commitment to $53,000, the account remains
exempt under § 1026.3(b). However, if during
year one the creditor reduces its firm
commitment to $40,000, the account is no
longer exempt under § 1026.3(b).
2. Assume that, at account opening in year
one, the threshold amount in effect is
$50,000 and the account is exempt under
§ 1026.3(b) based on the creditor’s firm
commitment to extend $55,000 in credit. If
the threshold amount is $56,000 on January
1 of year six as a result of increases in the
CPI–W, the account remains exempt.
However, if the creditor reduces its firm
commitment to $54,000 on July 1 of year six,
the account ceases to be exempt under
§ 1026.3(b).
B. Initial extension of credit. If an open-end
account qualifies for a § 1026.3(b) exemption
at account opening based on a firm
commitment, that account may also
subsequently qualify for a § 1026.3(b)
exemption based on an initial extension of
credit. However, that initial extension must
be a single advance in excess of the threshold
amount in effect at the time the extension is
made. In addition, the account must continue
to qualify for an exemption based on the firm
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commitment until the initial extension of
credit is made. For example:
1. Assume that, at account opening in year
one, the threshold amount in effect is
$50,000 and the account is exempt under
§ 1026.3(b) based on the creditor’s firm
commitment to extend $55,000 in credit. The
account is not used for an extension of credit
during year one. On January 1 of year two,
the threshold amount is increased to $51,000
pursuant to § 1026.3(b)(1)(ii) as a result of an
increase in the CPI–W. On July 1 of year two,
the consumer uses the account for an initial
extension of $52,000. As a result of this
extension of credit, the account remains
exempt under § 1026.3(b) even if, after July
1 of year two, the creditor reduces the firm
commitment to $51,000 or less.
2. Same facts as in paragraph 4.iv.B.1 of
this section except that the consumer uses
the account for an initial extension of
$30,000 on July 1 of year two and for an
extension of $22,000 on July 15 of year two.
In these circumstances, the account is not
exempt under § 1026.3(b) based on the
$30,000 initial extension of credit because
that extension did not exceed the applicable
threshold amount ($51,000), although the
account remains exempt based on the firm
commitment to extend $55,000 in credit.
3. Same facts as in paragraph 4.iv.B.1 of
this section except that, on April 1 of year
two, the creditor reduces the firm
commitment to $50,000, which is below the
$51,000 threshold then in effect. Because the
account ceases to qualify for a § 1026.3(b)
exemption on April 1 of year two, the
account does not qualify for a § 1026.3(b)
exemption based on a $52,000 initial
extension of credit on July 1 of year two.
5. Closed-end credit.
i. Qualifying for exemption. A closed-end
loan is exempt under § 1026.3(b) (unless the
extension of credit is secured by real
property, or by personal property used or
expected to be used as the consumer’s
principal dwelling; or is a private education
loan as defined in § 1026.46(b)(5)), if either
of the following conditions is met:
A. The creditor makes an extension of
credit at consummation that exceeds the
threshold amount in effect at the time of
consummation. In these circumstances, the
loan remains exempt under § 1026.3(b) even
if the amount owed is subsequently reduced
below the threshold amount (such as through
repayment of the loan).
B. The creditor makes a commitment at
consummation to extend a total amount of
credit in excess of the threshold amount in
effect at the time of consummation. In these
circumstances, the loan remains exempt
under § 1026.3(b) even if the total amount of
credit extended does not exceed the
threshold amount.
ii. Subsequent changes. If a creditor makes
a closed-end extension of credit or
commitment to extend closed-end credit that
exceeds the threshold amount in effect at the
time of consummation, the closed-end loan
remains exempt under § 1026.3(b) regardless
of a subsequent increase in the threshold
amount. However, a closed-end loan is not
exempt under § 1026.3(b) merely because it
is used to satisfy and replace an existing
exempt loan, unless the new extension of
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credit is itself exempt under the applicable
threshold amount. For example, assume a
closed-end loan that qualified for a
§ 1026.3(b) exemption at consummation in
year one is refinanced in year ten and that
the new loan amount is less than the
threshold amount in effect in year ten. In
these circumstances, the creditor must
comply with all of the applicable
requirements of this part with respect to the
year ten transaction if the original loan is
satisfied and replaced by the new loan,
which is not exempt under § 1026.3(b). See
also comment 3(b)–6.
6. Addition of a security interest in real
property or a dwelling after account opening
or consummation.
i. Open-end credit. For open-end accounts,
if after account opening a security interest is
taken in real property, or in personal
property used or expected to be used as the
consumer’s principal dwelling, a previously
exempt account ceases to be exempt under
§ 1026.3(b) and the creditor must begin to
comply with all of the applicable
requirements of this part within a reasonable
period of time. See comment 3(b)–4.ii. If a
security interest is taken in the consumer’s
principal dwelling, the creditor must also
give the consumer the right to rescind the
security interest consistent with § 1026.15.
ii. Closed-end credit. For closed-end loans,
if after consummation a security interest is
taken in real property, or in personal
property used or expected to be used as the
consumer’s principal dwelling, an exempt
loan remains exempt under § 1026.3(b).
However, the addition of a security interest
in the consumer’s principal dwelling is a
transaction for purposes of § 1026.23, and the
creditor must give the consumer the right to
rescind the security interest consistent with
that section. See § 1026.23(a)(1) and its
commentary. In contrast, if a closed-end loan
that is exempt under § 1026.3(b) is satisfied
and replaced by a loan that is secured by real
property, or by personal property used or
expected to be used as the consumer’s
principal dwelling, the new loan is not
exempt under § 1026.3(b), and the creditor
must comply with all of the applicable
requirements of this part. See comment 3(b)–
5.
7. Application to extensions secured by
mobile homes. Because a mobile home can be
a dwelling under § 1026.2(a)(19), the
exemption in § 1026.3(b) does not apply to a
credit extension secured by a mobile home
that is used or expected to be used as the
principal dwelling of the consumer. See
comment 3(b)–6.
8. Transition rule for open-end accounts
exempt prior to July 21, 2011. Section
1026.3(b)(2) applies only to open-end
accounts opened prior to July 21, 2011.
Section 1026.3(b)(2) does not apply if a
security interest is taken by the creditor in
real property, or in personal property used or
expected to be used as the consumer’s
principal dwelling. If, on July 20, 2011, an
open-end account is exempt under
§ 1026.3(b) based on a firm commitment to
extend credit in excess of $25,000, the
account remains exempt under § 1026.3(b)(2)
until December 31, 2011 (unless the firm
commitment is reduced to $25,000 or less).
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If the firm commitment is increased on or
before December 31, 2011, to an amount in
excess of $50,000, the account remains
exempt under § 1026.3(b)(1) regardless of
subsequent increases in the threshold
amount as a result of increases in the CPI–
W. If the firm commitment is not increased
on or before December 31, 2011, to an
amount in excess of $50,000, the account
ceases to be exempt under § 1026.3(b) based
on a firm commitment to extend credit. For
example:
i. Assume that, on July 20, 2011, the
account is exempt under § 1026.3(b) based on
the creditor’s firm commitment to extend
$30,000 in credit. On November 1, 2011, the
creditor increases the firm commitment on
the account to $55,000. In these
circumstances, the account remains exempt
under § 1026.3(b)(1) regardless of subsequent
increases in the threshold amount as a result
of increases in the CPI–W.
ii. Same facts as paragraph 8.i of this
section except, on November 1, 2011, the
creditor increases the firm commitment on
the account to $40,000. In these
circumstances, the account ceases to be
exempt under § 1026.3(b)(2) after December
31, 2011, and the creditor must begin to
comply with the applicable requirements of
this part.
*
*
*
*
*
By order of the Board of Governors of the
Federal Reserve System, acting through the
Secretary of the Board under delegated
authority.
Benjamin W. McDonough,
Deputy Secretary of the Board.
Brian Shearer,
Assistant Director, Office of Policy Planning
and Strategy, Consumer Financial Protection
Bureau.
[FR Doc. 2024–23275 Filed 10–11–24; 8:45 am]
BILLING CODE 6210–01–P; 4810–AM–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 71
[Docket No. FAA–2023–2513; Airspace
Docket No. 23–AGL–26]
RIN 2120–AA66
Amendment of Jet Route J–211 and
Revocation of VOR Federal Airway V–
41; Youngstown, OH
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule, delay of effective
date.
AGENCY:
This action delays the
effective date of a final rule published
in the Federal Register on August 19,
2024, corrected September 30, 2024,
amending Jet Route J–211 and revoking
Very High Frequency Omnidirectional
Range (VOR) Federal Airway V–41. The
SUMMARY:
PO 00000
Frm 00014
Fmt 4700
Sfmt 4700
FAA is delaying the effective date to
allow sufficient time for completing the
update of all the Instrument Approach
Procedures (IAP) into Pittsburgh
International Airport that are affected by
the revocation of V–41.
DATES: The effective date of the final
rule published on August 19, 2024 (89
FR 66987) and corrected on September
30, 2024 (89 FR 79429) is delayed from
October 31, 2024, to December 26, 2024.
The Director of the Federal Register
approved this incorporation by
reference action under 1 CFR part 51,
subject to the annual revision of FAA
Order JO 7400.11 and publication of
conforming amendments.
FOR FURTHER INFORMATION CONTACT:
Colby Abbott, Rules and Regulations
Group, Office of Policy, Federal
Aviation Administration, 600
Independence Avenue SW, Washington,
DC 20597; telephone: (202) 267–8783.
SUPPLEMENTARY INFORMATION:
Background
The FAA published a final rule in the
Federal Register for Docket No. FAA–
2023–2513 (89 FR 66987, August 19,
2024, and correction (89 FR 79429;
September 30, 2024), amending Jet
Route J–211 and revoking VOR Federal
Airway V–41 due to the planned
decommissioning of the VOR portion of
the Youngstown, OH, VOR/Tactical Air
Navigation (VORTAC) navigational aid
(NAVAID). The effective date for that
final rule is October 31, 2024. After the
final rule was published, the FAA
determined that the required update
actions to all the IAPs into Pittsburgh
International Airport would not be
completed in time to meet the original
planned decommissioning date.
Therefore, the current IAPs need to
remain in place, to include VOR Federal
Airway V–41 which is a transition on
the JESEY Four Arrival into Pittsburgh
International Airport, until the next
chart date.
The FAA expects the required
updates for all the IAPs into Pittsburgh
International Airport to be completed by
December 26, 2024; therefore, the rule
amending Jet Route J–211 and revoking
VOR Federal Airway V–41 is delayed to
coincide with that date.
Jet Routes are published in paragraph
2004 and VOR Federal Airways are
published in paragraph 6010(a) of FAA
Order JO 7400.11, Airspace
Designations and Reporting Points,
which is incorporated by reference in 14
CFR 71.1 on an annual basis. This
document amends the current version of
that order, FAA Order JO 7400.11J,
dated July 31, 2024, and effective
September 15, 2024. FAA Order JO
E:\FR\FM\15OCR1.SGM
15OCR1
]]>Agencies
- FEDERAL RESERVE SYSTEM
- CONSUMER FINANCIAL PROTECTION BUREAU
[Federal Register Volume 89, Number 199 (Tuesday, October 15, 2024)]
[Rules and Regulations]
[Pages 82938-82944]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-23275]
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Docket No. R-1843]
RIN 7100-AG 84
CONSUMER FINANCIAL PROTECTION BUREAU
12 CFR Part 1026
Truth in Lending (Regulation Z)
AGENCY: Board of Governors of the Federal Reserve System (Board) and
Consumer Financial Protection Bureau (CFPB).
ACTION: Final rules, official interpretations.
-----------------------------------------------------------------------
SUMMARY: The Board and the CFPB (collectively, Agencies) are publishing
final rules amending the official interpretations for the Agencies'
regulations that implement the Truth in Lending Act (TILA). The Dodd-
Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act)
amended TILA by requiring that the dollar threshold for exempt consumer
credit transactions be adjusted annually by the annual percentage
increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W). Based on the annual percentage increase in
the CPI-W as of June 1, 2024, the exemption threshold will increase
from $69,500 to $71,900 effective January 1, 2025. Because the Dodd-
Frank Act also requires similar adjustments in the Consumer Leasing
Act's threshold for exempt consumer leases, the Agencies are making
similar amendments to each of their respective regulations implementing
the Consumer Leasing Act elsewhere in the Rules section of this issue
of the Federal Register.
DATES: This final rule is effective January 1, 2025.
FOR FURTHER INFORMATION CONTACT:
Board: Vivian W. Wong, Senior Counsel, Division of Consumer and
Community Affairs, Board of Governors of the Federal Reserve System, at
(202) 452-3667. For users of TTY-TRS, please call 711 from any
telephone, anywhere in the United States.
CFPB: George Karithanom, Regulatory Implementation & Guidance
Program Analyst, Office of Regulations, at 202-435-7700 or at: https://reginquiries.consumerfinance.gov/. If you require this document in an
alternative electronic format, please contact
[email protected].
SUPPLEMENTARY INFORMATION:
[[Page 82939]]
I. Background
The Dodd-Frank Act increased the threshold in TILA for exempt
consumer credit transactions,\1\ and the threshold in the Consumer
Leasing Act (CLA) for exempt consumer leases, from $25,000 to $50,000,
effective July 21, 2011.\2\ In addition, the Dodd-Frank Act requires
that, on and after December 31, 2011, these thresholds be adjusted
annually for inflation by the annual percentage increase in the CPI-W,
as published by the Bureau of Labor Statistics.\3\ In April 2011, the
Board issued a final rule amending Regulation Z (which implements TILA)
consistent with these provisions of the Dodd-Frank Act, along with a
similar final rule amending Regulation M (which implements the CLA)
(collectively, Board Final Threshold Rules).\4\
---------------------------------------------------------------------------
\1\ Although consumer credit transactions above the threshold
are generally exempt, loans secured by real property or by personal
property used or expected to be used as the principal dwelling of a
consumer and private education loans are covered by TILA regardless
of the loan amount. See 12 CFR 226.3(b)(1)(i) (Board) and 12 CFR
1026.3(b)(1)(i) (CFPB).
\2\ Public Law 111-203, sec. 1100E, 124 Stat. 1376, 2111 (2010).
\3\ Id.
\4\ 76 FR 18354 (Apr. 4, 2011); 76 FR 18349 (Apr. 4, 2011).
---------------------------------------------------------------------------
Title X of the Dodd-Frank Act transferred rulemaking authority for
a number of consumer financial protection laws from the Board to the
CFPB, effective July 21, 2011. In connection with this transfer of
rulemaking authority, the CFPB issued its own Regulation Z implementing
TILA, 12 CFR part 1026, substantially duplicating the Board's
Regulation Z.\5\ Although the CFPB has the authority to issue rules to
implement TILA for most entities, the Board retains authority to issue
rules under TILA for certain motor vehicle dealers covered by section
1029(a) of the Dodd-Frank Act, and the Board's Regulation Z continues
to apply to those entities.\6\
---------------------------------------------------------------------------
\5\ See 76 FR 79768 (Dec. 22, 2011); 81 FR 25323 (Apr. 28,
2016).
\6\ Section 1029(a) of the Dodd-Frank Act states: ``Except as
permitted in subsection (b), the Bureau may not exercise any
rulemaking, supervisory, enforcement, or any other authority . . .
over a motor vehicle dealer that is predominantly engaged in the
sale and servicing of motor vehicles, the leasing and servicing of
motor vehicles, or both.'' 12 U.S.C. 5519(a). Section 1029(b) of the
Dodd-Frank Act provides that ``[s]ubsection (a) shall not apply to
any person, to the extent that such person--(1) provides consumers
with any services related to residential or commercial mortgages or
self-financing transactions involving real property; (2) operates a
line of business--(A) that involves the extension of retail credit
or retail leases involving motor vehicles; and (B) in which--(i) the
extension of retail credit or retail leases are provided directly to
consumers; and (ii) the contract governing such extension of retail
credit or retail leases is not routinely assigned to an unaffiliated
third party finance or leasing source; or (3) offers or provides a
consumer financial product or service not involving or related to
the sale, financing, leasing, rental, repair, refurbishment,
maintenance, or other servicing of motor vehicles, motor vehicle
parts, or any related or ancillary product or service.'' 12 U.S.C.
5519(b).
---------------------------------------------------------------------------
The Agencies' regulations,\7\ and their accompanying official
interpretations, provide that the exemption threshold will be adjusted
annually effective January 1 of each year based on any annual
percentage increase in the CPI-W that was in effect on the preceding
June 1. They further provide that any increase in the threshold amount
will be rounded to the nearest $100 increment. For example, if the
annual percentage increase in the 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.\8\ Since 2011, the Agencies have adjusted
the Regulation Z exemption threshold annually, in accordance with these
rules.
---------------------------------------------------------------------------
\7\ 12 CFR 226.3(b)(1)(ii) (Board) and 12 CFR 1026.3(b)(1)(ii)
(CFPB).
\8\ See comments 3(b)-1 in supplement I of 12 CFR parts 226 and
1026.
---------------------------------------------------------------------------
On November 30, 2016, the Agencies 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, as
contemplated by section 1100E(b) of the Dodd-Frank Act, the values for
the exemption threshold keep pace with the CPI-W (Regulation Z
Adjustment Calculation Rule).\9\ The Regulation Z Adjustment
Calculation Rule memorialized the policy that, if there is no annual
percentage increase in the CPI-W, the Agencies will not adjust the
exemption threshold from the prior year. The Regulation Z 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 86260 (Nov. 30, 2016).
---------------------------------------------------------------------------
II. 2025 Adjustment and Official Interpretations Revision
Effective January 1, 2025, the exemption threshold amount is
increased from $69,500 to $71,900. This amount is based on the CPI-W in
effect on June 1, 2024, which was reported on May 15, 2024 (based on
April 2024 data).\10\ The CPI-W is a subset of the CPI-U index (based
on all urban consumers) and represents approximately 30 percent of the
U.S. population. The CPI-W reported on May 15, 2024, reflects a 3.4
percent increase in the CPI-W from April 2023 to April 2024.
Accordingly, the 3.4 percent increase in the CPI-W from April 2023 to
April 2024 results in an exemption threshold amount of $71,900, after
rounding. The Agencies are revising the official interpretations to
their respective regulations to add new comment 3(b)-3.xvi to state
that, from January 1, 2025, through December 31, 2025, the threshold
amount is $71,900. These revisions are effective January 1, 2025.
---------------------------------------------------------------------------
\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, 2024, were reported on May 15, 2024, and
reflect economic conditions in April 2024.
---------------------------------------------------------------------------
III. Regulatory Analysis
Administrative Procedure Act
Under the Administrative Procedure Act, notice and opportunity for
public comment are not required if the Agencies find 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 set forth in the Board Final Threshold
Rules and the Regulation Z Adjustment Calculation Rule. For these
reasons, the Agencies 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,
[[Page 82940]]
the Agencies have determined that it is unnecessary to publish a
general notice of proposed rulemaking for this joint final rule.
Accordingly, the RFA's requirements relating to an initial and final
regulatory flexibility analysis do not apply.
---------------------------------------------------------------------------
\12\ 5 U.S.C. 603(a), 604(a).
---------------------------------------------------------------------------
Paperwork Reduction Act
The Agencies reviewed this final rule in accordance with the
Paperwork Reduction Act of 1995.\13\ The Agencies have determined that
this rule does not create any new information collections or
substantially revise any existing collections.
---------------------------------------------------------------------------
\13\ 44 U.S.C. 3506; 5 CFR part 1320.
---------------------------------------------------------------------------
CFPB Congressional Review Act Statement
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the CFPB 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).
List of Subjects
12 CFR Part 226
Advertising, Consumer protection, 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.
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
1. 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
2. In supplement I to part 226, under Section 226.3--Exempt
Transactions, revise 3(b) Credit over applicable threshold amount, to
read as follows:
Supplement I to Part 226--Official Staff Interpretations
* * * * *
Section 226.3--Exempt Transactions
* * * * *
3(b) Credit over applicable threshold amount.
1. Threshold amount. For purposes of Sec. 226.3(b), the
threshold amount in effect during a particular period is the amount
stated in comment 3(b)-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 3(b)-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. 226.3(b), the threshold
amount in effect during a particular period is the amount stated in
the following for that period.
i. Prior to July 21, 2011, the threshold amount is $25,000.
ii. From July 21, 2011, through December 31, 2011, the threshold
amount is $50,000.
iii. From January 1, 2012, through December 31, 2012, the
threshold amount is $51,800.
iv. From January 1, 2013, through December 31, 2013, the
threshold amount is $53,000.
v. From January 1, 2014, through December 31, 2014, the
threshold amount is $53,500.
vi. From January 1, 2015, through December 31, 2015, the
threshold amount is $54,600.
vii. From January 1, 2016, through December 31, 2016, the
threshold amount is $54,600.
viii. From January 1, 2017, through December 31, 2017, the
threshold amount is $54,600.
ix. From January 1, 2018, through December 31, 2018, the
threshold amount is $55,800.
x. From January 1, 2019, through December 31, 2019, the
threshold amount is $57,200.
xi. From January 1, 2020, through December 31, 2020, the
threshold amount is $58,300.
xii. From January 1, 2021, through December 31, 2021, the
threshold amount is $58,300.
xiii. From January 1, 2022, through December 31, 2022, the
threshold amount is $61,000.
xiv. From January 1, 2023, through December 31, 2023, the
threshold amount is $66,400.
xv. From January 1, 2024, through December 31, 2024, the
threshold amount is $69,500.
xvi. From January 1, 2025, through December 31, 2025, the
threshold amount is $71,900.
4. Open-end credit.
i. Qualifying for exemption. An open-end account is exempt under
Sec. 226.3(b) (unless secured by any real property, or by personal
property used or expected to be used as the consumer's principal
dwelling) if either of the following conditions is met:
A. The creditor makes an initial extension of credit at or after
account opening that exceeds the threshold amount in effect at the
time the initial extension is made. If a creditor makes an initial
extension of credit after account opening that does not exceed the
threshold amount in effect at the time the extension is made, the
creditor must have satisfied all of the applicable requirements of
this part from the date the account was opened (or earlier, if
applicable), including but not limited to the requirements of Sec.
226.6 (account-opening disclosures), Sec. 226.7 (periodic
statements), Sec. 226.52 (limitations on fees), and Sec. 226.55
(limitations on increasing annual percentages rates, fees, and
charges). For example:
(1) Assume that the threshold amount in effect on January 1 is
$50,000. On February 1, an account is opened but the creditor does
not make an initial extension of credit at that time. On July 1, the
creditor makes an initial extension of credit of $60,000. In this
circumstance, no requirements of this part apply to the account.
(2) Assume that the threshold amount in effect on January 1 is
$50,000. On February 1, an account is opened but the creditor does
not make an initial extension of credit at that time. On July 1, the
creditor makes an initial extension of credit of $50,000 or less. In
this circumstance, the account is not exempt, and the creditor must
have satisfied all of the applicable requirements of this part from
the date the account was opened (or earlier, if applicable).
B. The creditor makes a firm written commitment at account
opening to extend a total amount of credit in excess of the
threshold amount in effect at the time the
[[Page 82941]]
account is opened with no requirement of additional credit
information for any advances on the account (except as permitted
from time to time with respect to open-end accounts pursuant to
Sec. 226.2(a)(20)).
ii. Subsequent changes generally. Subsequent changes to an open-
end account or the threshold amount may result in the account no
longer qualifying for the exemption in Sec. 226.3(b). In these
circumstances, the creditor must begin to comply with all of the
applicable requirements of this part within a reasonable period of
time after the account ceases to be exempt. Once an account ceases
to be exempt, the requirements of this part apply to any balances on
the account. The creditor, however, is not required to comply with
the requirements of this part with respect to the period of time
during which the account was exempt. For example, if an open-end
credit account ceases to be exempt, the creditor must within a
reasonable period of time provide the disclosures required by Sec.
226.6 reflecting the current terms of the account and begin to
provide periodic statements consistent with Sec. 226.7. However,
the creditor is not required to disclose fees or charges imposed
while the account was exempt. Furthermore, if the creditor provided
disclosures consistent with the requirements of this part while the
account was exempt, it is not required to provide disclosures
required by Sec. 226.6 reflecting the current terms of the account.
See also comment 3(b)-6.
iii. Subsequent changes when exemption is based on initial
extension of credit. If a creditor makes an initial extension of
credit that exceeds the threshold amount in effect at that time, the
open-end account remains exempt under Sec. 226.3(b) regardless of a
subsequent increase in the threshold amount, including an increase
pursuant to Sec. 226.3(b)(1)(ii) as a result of an increase in the
CPI-W. Furthermore, in these circumstances, the account remains
exempt even if there are no further extensions of credit, subsequent
extensions of credit do not exceed the threshold amount, the account
balance is subsequently reduced below the threshold amount (such as
through repayment of the extension), or the credit limit for the
account is subsequently reduced below the threshold amount. However,
if the initial extension of credit on an account does not exceed the
threshold amount in effect at the time of the extension, the account
is not exempt under Sec. 226.3(b) even if a subsequent extension
exceeds the threshold amount or if the account balance later exceeds
the threshold amount (for example, due to the subsequent accrual of
interest).
iv. Subsequent changes when exemption is based on firm
commitment.
A. General. If a creditor makes a firm written commitment at
account opening to extend a total amount of credit that exceeds the
threshold amount in effect at that time, the open-end account
remains exempt under Sec. 226.3(b) regardless of a subsequent
increase in the threshold amount pursuant to Sec. 226.3(b)(1)(ii)
as a result of an increase in the CPI-W. However, see comment 3(b)-8
with respect to the increase in the threshold amount from $25,000 to
$50,000. If an open-end account is exempt under Sec. 226.3(b) based
on a firm commitment to extend credit, the account remains exempt
even if the amount of credit actually extended does not exceed the
threshold amount. In contrast, if the firm commitment does not
exceed the threshold amount at account opening, the account is not
exempt under Sec. 226.3(b) even if the account balance later
exceeds the threshold amount. In addition, if a creditor reduces a
firm commitment, the account ceases to be exempt unless the reduced
firm commitment exceeds the threshold amount in effect at the time
of the reduction. For example:
(1) Assume that, at account opening in year one, the threshold
amount in effect is $50,000 and the account is exempt under Sec.
226.3(b) based on the creditor's firm commitment to extend $55,000
in credit. If during year one the creditor reduces its firm
commitment to $53,000, the account remains exempt under Sec.
226.3(b). However, if during year one the creditor reduces its firm
commitment to $40,000, the account is no longer exempt under Sec.
226.3(b).
(2) Assume that, at account opening in year one, the threshold
amount in effect is $50,000 and the account is exempt under Sec.
226.3(b) based on the creditor's firm commitment to extend $55,000
in credit. If the threshold amount is $56,000 on January 1 of year
six as a result of increases in the CPI-W, the account remains
exempt. However, if the creditor reduces its firm commitment to
$54,000 on July 1 of year six, the account ceases to be exempt under
Sec. 226.3(b).
B. Initial extension of credit. If an open-end account qualifies
for a Sec. 226.3(b) exemption at account opening based on a firm
commitment, that account may also subsequently qualify for a Sec.
226.3(b) exemption based on an initial extension of credit. However,
that initial extension must be a single advance in excess of the
threshold amount in effect at the time the extension is made. In
addition, the account must continue to qualify for an exemption
based on the firm commitment until the initial extension of credit
is made. For example:
(1) Assume that, at account opening in year one, the threshold
amount in effect is $50,000 and the account is exempt under Sec.
226.3(b) based on the creditor's firm commitment to extend $55,000
in credit. The account is not used for an extension of credit during
year one. On January 1 of year two, the threshold amount is
increased to $51,000 pursuant to Sec. 226.3(b)(1)(ii) as a result
of an increase in the CPI-W. On July 1 of year two, the consumer
uses the account for an initial extension of $52,000. As a result of
this extension of credit, the account remains exempt under Sec.
226.3(b) even if, after July 1 of year two, the creditor reduces the
firm commitment to $51,000 or less.
(2) Same facts as in paragraph 4.iv.B(1) of this section except
that the consumer uses the account for an initial extension of
$30,000 on July 1 of year two and for an extension of $22,000 on
July 15 of year two. In these circumstances, the account is not
exempt under Sec. 226.3(b) based on the $30,000 initial extension
of credit because that extension did not exceed the applicable
threshold amount ($51,000), although the account remains exempt
based on the firm commitment to extend $55,000 in credit.
(3) Same facts as in paragraph 4.iv.B(1) of this section except
that, on April 1 of year two, the creditor reduces the firm
commitment to $50,000, which is below the $51,000 threshold then in
effect. Because the account ceases to qualify for a Sec. 226.3(b)
exemption on April 1 of year two, the account does not qualify for a
Sec. 226.3(b) exemption based on a $52,000 initial extension of
credit on July 1 of year two.
5. Closed-end credit.
i. Qualifying for exemption. A closed-end loan is exempt under
Sec. 226.3(b) (unless the extension of credit is secured by any
real property, or by personal property used or expected to be used
as the consumer's principal dwelling; or is a private education loan
as defined in Sec. 226.46(b)(5)), if either of the following
conditions is met.
A. The creditor makes an extension of credit at consummation
that exceeds the threshold amount in effect at the time of
consummation. In these circumstances, the loan remains exempt under
Sec. 226.3(b) even if the amount owed is subsequently reduced below
the threshold amount (such as through repayment of the loan).
B. The creditor makes a commitment at consummation to extend a
total amount of credit in excess of the threshold amount in effect
at the time of consummation. In these circumstances, the loan
remains exempt under Sec. 226.3(b) even if the total amount of
credit extended does not exceed the threshold amount.
ii. Subsequent changes. If a creditor makes a closed-end
extension of credit or commitment to extend closed-end credit that
exceeds the threshold amount in effect at the time of consummation,
the closed-end loan remains exempt under Sec. 226.3(b) regardless
of a subsequent increase in the threshold amount. However, a closed-
end loan is not exempt under Sec. 226.3(b) merely because it is
used to satisfy and replace an existing exempt loan, unless the new
extension of credit is itself exempt under the applicable threshold
amount. For example, assume a closed-end loan that qualified for a
Sec. 226.3(b) exemption at consummation in year one is refinanced
in year ten and that the new loan amount is less than the threshold
amount in effect in year ten. In these circumstances, the creditor
must comply with all of the applicable requirements of this part
with respect to the year ten transaction if the original loan is
satisfied and replaced by the new loan, which is not exempt under
Sec. 226.3(b). See also comment 3(b)-6.
6. Addition of a security interest in real property or a
dwelling after account opening or consummation.
i. Open-end credit. For open-end accounts, if, after account
opening, a security interest is taken in real property, or in
personal property used or expected to be used as the consumer's
principal dwelling, a previously exempt account ceases to be exempt
under Sec. 226.3(b) and the creditor must begin to comply with all
of the applicable requirements of this part within a reasonable
period of time. See comment 3(b)-4.ii. If a security interest is
taken in the consumer's principal dwelling, the creditor must also
[[Page 82942]]
give the consumer the right to rescind the security interest
consistent with Sec. 226.15.
ii. Closed-end credit. For closed-end loans, if, after
consummation, a security interest is taken in any real property, or
in personal property used or expected to be used as the consumer's
principal dwelling, an exempt loan remains exempt under Sec.
226.3(b). However, the addition of a security interest in the
consumer's principal dwelling is a transaction for purposes of Sec.
226.23, and the creditor must give the consumer the right to rescind
the security interest consistent with that section. See Sec.
226.23(a)(1) and the accompanying commentary. In contrast, if a
closed-end loan that is exempt under Sec. 226.3(b) is satisfied and
replaced by a loan that is secured by any real property, or by
personal property used or expected to be used as the consumer's
principal dwelling, the new loan is not exempt under Sec. 226.3(b)
and the creditor must comply with all of the applicable requirements
of this part. See comment 3(b)-5.
7. Application to extensions secured by mobile homes. Because a
mobile home can be a dwelling under Sec. 226.2(a)(19), the
exemption in Sec. 226.3(b) does not apply to a credit extension
secured by a mobile home that is used or expected to be used as the
principal dwelling of the consumer. See comment 3(b)-6.
8. Transition rule for open-end accounts exempt prior to July
21, 2011. Section 226.3(b)(2) applies only to open-end accounts
opened prior to July 21, 2011. Section 226.3(b)(2) does not apply if
a security interest is taken by the creditor in any real property,
or in personal property used or expected to be used as the
consumer's principal dwelling. If, on July 20, 2011, an open-end
account is exempt under Sec. 226.3(b) based on a firm commitment to
extend credit in excess of $25,000, the account remains exempt under
Sec. 226.3(b)(2) until December 31, 2011 (unless the firm
commitment is reduced to $25,000 or less). If the firm commitment is
increased on or before December 31, 2011, to an amount in excess of
$50,000, the account remains exempt under Sec. 226.3(b)(1)
regardless of subsequent increases in the threshold amount as a
result of increases in the CPI-W. If the firm commitment is not
increased on or before December 31, 2011, to an amount in excess of
$50,000, the account ceases to be exempt under Sec. 226.3(b) based
on a firm commitment to extend credit. For example:
i. Assume that, on July 20, 2011, the account is exempt under
Sec. 226.3(b) based on the creditor's firm commitment to extend
$30,000 in credit. On November 1, 2011, the creditor increases the
firm commitment on the account to $55,000. In these circumstances,
the account remains exempt under Sec. 226.3(b)(1) regardless of
subsequent increases in the threshold amount as a result of
increases in the CPI-W.
ii. Same facts as paragraph 8.i. of this section except, on
November 1, 2011, the creditor increases the firm commitment on the
account to $40,000. In these circumstances, the account ceases to be
exempt under Sec. 226.3(b)(2) after December 31, 2011, and the
creditor must begin to comply with the applicable requirements of
this part.
* * * * *
CONSUMER FINANCIAL PROTECTION BUREAU
Authority and Issuance
For the reasons set forth in the preamble, the CFPB amends
Regulation Z, 12 CFR part 1026, as set forth below:
PART 1026--TRUTH IN LENDING (REGULATION Z)
0
3. 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
4. In supplement I to part 1026, under Section 1026.3--Exempt
Transactions, revise 3(b)--Credit Over Applicable Threshold Amount to
read as follows:
Supplement I to Part 1026--Official Interpretations
* * * * *
Section 1026.3--Exempt Transactions
* * * * *
3(b) Credit Over Applicable Threshold Amount
1. Threshold amount. For purposes of Sec. 1026.3(b), the
threshold amount in effect during a particular period is the amount
stated in comment 3(b)-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 3(b)-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. 1026.3(b), the threshold
amount in effect during a particular period is the amount stated in
the following for that period.
i. Prior to July 21, 2011, the threshold amount is $25,000.
ii. From July 21, 2011, through December 31, 2011, the threshold
amount is $50,000.
iii. From January 1, 2012, through December 31, 2012, the
threshold amount is $51,800.
iv. From January 1, 2013, through December 31, 2013, the
threshold amount is $53,000.
v. From January 1, 2014, through December 31, 2014, the
threshold amount is $53,500.
vi. From January 1, 2015, through December 31, 2015, the
threshold amount is $54,600.
vii. From January 1, 2016, through December 31, 2016, the
threshold amount is $54,600.
viii. From January 1, 2017, through December 31, 2017, the
threshold amount is $54,600.
ix. From January 1, 2018, through December 31, 2018, the
threshold amount is $55,800.
x. From January 1, 2019, through December 31, 2019, the
threshold amount is $57,200.
xi. From January 1, 2020, through December 31, 2020, the
threshold amount is $58,300.
xii. From January 1, 2021, through December 31, 2021, the
threshold amount is $58,300. xiii. From January 1, 2022, through
December 31, 2022, the threshold amount is $61,000.
xiv. From January 1, 2023, through December 31, 2023, the
threshold amount is $66,400.
xv. From January 1, 2024, through December 31, 2024, the
threshold amount is $69,500.
xvi. From January 1, 2025, through December 31, 2025, the
threshold amount is $71,900.
4. Open-end credit.
i. Qualifying for exemption. An open-end account is exempt under
Sec. 1026.3(b) (unless secured by real property, or by personal
property used or expected to be used as the consumer's principal
dwelling) if either of the following conditions is met:
A. The creditor makes an initial extension of credit at or after
account opening that exceeds the threshold amount in effect at the
time the initial extension is made. If a creditor makes an initial
extension of credit after account opening that does not exceed the
threshold amount in effect at the time the extension is made, the
creditor must have satisfied all of the applicable requirements of
this part from the date the account was opened (or earlier, if
applicable), including but not limited to the requirements of Sec.
1026.6 (account-opening disclosures),
[[Page 82943]]
Sec. 1026.7 (periodic statements), Sec. 1026.52 (limitations on
fees), and Sec. 1026.55 (limitations on increasing annual
percentage rates, fees, and charges). For example:
1. Assume that the threshold amount in effect on January 1 is
$50,000. On February 1, an account is opened but the creditor does
not make an initial extension of credit at that time. On July 1, the
creditor makes an initial extension of credit of $60,000. In this
circumstance, no requirements of this part apply to the account.
2. Assume that the threshold amount in effect on January 1 is
$50,000. On February 1, an account is opened but the creditor does
not make an initial extension of credit at that time. On July 1, the
creditor makes an initial extension of credit of $50,000 or less. In
this circumstance, the account is not exempt, and the creditor must
have satisfied all of the applicable requirements of this part from
the date the account was opened (or earlier, if applicable).
B. The creditor makes a firm written commitment at account
opening to extend a total amount of credit in excess of the
threshold amount in effect at the time the account is opened with no
requirement of additional credit information for any advances on the
account (except as permitted from time to time with respect to open-
end accounts pursuant to Sec. 1026.2(a)(20)).
ii. Subsequent changes generally. Subsequent changes to an open-
end account or the threshold amount may result in the account no
longer qualifying for the exemption in Sec. 1026.3(b). In these
circumstances, the creditor must begin to comply with all of the
applicable requirements of this part within a reasonable period of
time after the account ceases to be exempt. Once an account ceases
to be exempt, the requirements of this part apply to any balances on
the account. The creditor, however, is not required to comply with
the requirements of this part with respect to the period of time
during which the account was exempt. For example, if an open-end
credit account ceases to be exempt, the creditor must within a
reasonable period of time provide the disclosures required by Sec.
1026.6 reflecting the current terms of the account and begin to
provide periodic statements consistent with Sec. 1026.7. However,
the creditor is not required to disclose fees or charges imposed
while the account was exempt. Furthermore, if the creditor provided
disclosures consistent with the requirements of this part while the
account was exempt, it is not required to provide disclosures
required by Sec. 1026.6 reflecting the current terms of the
account. See also comment 3(b)-6.
iii. Subsequent changes when exemption is based on initial
extension of credit. If a creditor makes an initial extension of
credit that exceeds the threshold amount in effect at that time, the
open-end account remains exempt under Sec. 1026.3(b) regardless of
a subsequent increase in the threshold amount, including an increase
pursuant to Sec. 1026.3(b)(1)(ii) as a result of an increase in the
CPI-W. Furthermore, in these circumstances, the account remains
exempt even if there are no further extensions of credit, subsequent
extensions of credit do not exceed the threshold amount, the account
balance is subsequently reduced below the threshold amount (such as
through repayment of the extension), or the credit limit for the
account is subsequently reduced below the threshold amount. However,
if the initial extension of credit on an account does not exceed the
threshold amount in effect at the time of the extension, the account
is not exempt under Sec. 1026.3(b) even if a subsequent extension
exceeds the threshold amount or if the account balance later exceeds
the threshold amount (for example, due to the subsequent accrual of
interest).
iv. Subsequent changes when exemption is based on firm
commitment.
A. General. If a creditor makes a firm written commitment at
account opening to extend a total amount of credit that exceeds the
threshold amount in effect at that time, the open-end account
remains exempt under Sec. 1026.3(b) regardless of a subsequent
increase in the threshold amount pursuant to Sec. 1026.3(b)(1)(ii)
as a result of an increase in the CPI-W. However, see comment 3(b)-8
with respect to the increase in the threshold amount from $25,000 to
$50,000. If an open-end account is exempt under Sec. 1026.3(b)
based on a firm commitment to extend credit, the account remains
exempt even if the amount of credit actually extended does not
exceed the threshold amount. In contrast, if the firm commitment
does not exceed the threshold amount at account opening, the account
is not exempt under Sec. 1026.3(b) even if the account balance
later exceeds the threshold amount. In addition, if a creditor
reduces a firm commitment, the account ceases to be exempt unless
the reduced firm commitment exceeds the threshold amount in effect
at the time of the reduction. For example:
1. Assume that, at account opening in year one, the threshold
amount in effect is $50,000 and the account is exempt under Sec.
1026.3(b) based on the creditor's firm commitment to extend $55,000
in credit. If during year one the creditor reduces its firm
commitment to $53,000, the account remains exempt under Sec.
1026.3(b). However, if during year one the creditor reduces its firm
commitment to $40,000, the account is no longer exempt under Sec.
1026.3(b).
2. Assume that, at account opening in year one, the threshold
amount in effect is $50,000 and the account is exempt under Sec.
1026.3(b) based on the creditor's firm commitment to extend $55,000
in credit. If the threshold amount is $56,000 on January 1 of year
six as a result of increases in the CPI-W, the account remains
exempt. However, if the creditor reduces its firm commitment to
$54,000 on July 1 of year six, the account ceases to be exempt under
Sec. 1026.3(b).
B. Initial extension of credit. If an open-end account qualifies
for a Sec. 1026.3(b) exemption at account opening based on a firm
commitment, that account may also subsequently qualify for a Sec.
1026.3(b) exemption based on an initial extension of credit.
However, that initial extension must be a single advance in excess
of the threshold amount in effect at the time the extension is made.
In addition, the account must continue to qualify for an exemption
based on the firm commitment until the initial extension of credit
is made. For example:
1. Assume that, at account opening in year one, the threshold
amount in effect is $50,000 and the account is exempt under Sec.
1026.3(b) based on the creditor's firm commitment to extend $55,000
in credit. The account is not used for an extension of credit during
year one. On January 1 of year two, the threshold amount is
increased to $51,000 pursuant to Sec. 1026.3(b)(1)(ii) as a result
of an increase in the CPI-W. On July 1 of year two, the consumer
uses the account for an initial extension of $52,000. As a result of
this extension of credit, the account remains exempt under Sec.
1026.3(b) even if, after July 1 of year two, the creditor reduces
the firm commitment to $51,000 or less.
2. Same facts as in paragraph 4.iv.B.1 of this section except
that the consumer uses the account for an initial extension of
$30,000 on July 1 of year two and for an extension of $22,000 on
July 15 of year two. In these circumstances, the account is not
exempt under Sec. 1026.3(b) based on the $30,000 initial extension
of credit because that extension did not exceed the applicable
threshold amount ($51,000), although the account remains exempt
based on the firm commitment to extend $55,000 in credit.
3. Same facts as in paragraph 4.iv.B.1 of this section except
that, on April 1 of year two, the creditor reduces the firm
commitment to $50,000, which is below the $51,000 threshold then in
effect. Because the account ceases to qualify for a Sec. 1026.3(b)
exemption on April 1 of year two, the account does not qualify for a
Sec. 1026.3(b) exemption based on a $52,000 initial extension of
credit on July 1 of year two.
5. Closed-end credit.
i. Qualifying for exemption. A closed-end loan is exempt under
Sec. 1026.3(b) (unless the extension of credit is secured by real
property, or by personal property used or expected to be used as the
consumer's principal dwelling; or is a private education loan as
defined in Sec. 1026.46(b)(5)), if either of the following
conditions is met:
A. The creditor makes an extension of credit at consummation
that exceeds the threshold amount in effect at the time of
consummation. In these circumstances, the loan remains exempt under
Sec. 1026.3(b) even if the amount owed is subsequently reduced
below the threshold amount (such as through repayment of the loan).
B. The creditor makes a commitment at consummation to extend a
total amount of credit in excess of the threshold amount in effect
at the time of consummation. In these circumstances, the loan
remains exempt under Sec. 1026.3(b) even if the total amount of
credit extended does not exceed the threshold amount.
ii. Subsequent changes. If a creditor makes a closed-end
extension of credit or commitment to extend closed-end credit that
exceeds the threshold amount in effect at the time of consummation,
the closed-end loan remains exempt under Sec. 1026.3(b) regardless
of a subsequent increase in the threshold amount. However, a closed-
end loan is not exempt under Sec. 1026.3(b) merely because it is
used to satisfy and replace an existing exempt loan, unless the new
extension of
[[Page 82944]]
credit is itself exempt under the applicable threshold amount. For
example, assume a closed-end loan that qualified for a Sec.
1026.3(b) exemption at consummation in year one is refinanced in
year ten and that the new loan amount is less than the threshold
amount in effect in year ten. In these circumstances, the creditor
must comply with all of the applicable requirements of this part
with respect to the year ten transaction if the original loan is
satisfied and replaced by the new loan, which is not exempt under
Sec. 1026.3(b). See also comment 3(b)-6.
6. Addition of a security interest in real property or a
dwelling after account opening or consummation.
i. Open-end credit. For open-end accounts, if after account
opening a security interest is taken in real property, or in
personal property used or expected to be used as the consumer's
principal dwelling, a previously exempt account ceases to be exempt
under Sec. 1026.3(b) and the creditor must begin to comply with all
of the applicable requirements of this part within a reasonable
period of time. See comment 3(b)-4.ii. If a security interest is
taken in the consumer's principal dwelling, the creditor must also
give the consumer the right to rescind the security interest
consistent with Sec. 1026.15.
ii. Closed-end credit. For closed-end loans, if after
consummation a security interest is taken in real property, or in
personal property used or expected to be used as the consumer's
principal dwelling, an exempt loan remains exempt under Sec.
1026.3(b). However, the addition of a security interest in the
consumer's principal dwelling is a transaction for purposes of Sec.
1026.23, and the creditor must give the consumer the right to
rescind the security interest consistent with that section. See
Sec. 1026.23(a)(1) and its commentary. In contrast, if a closed-end
loan that is exempt under Sec. 1026.3(b) is satisfied and replaced
by a loan that is secured by real property, or by personal property
used or expected to be used as the consumer's principal dwelling,
the new loan is not exempt under Sec. 1026.3(b), and the creditor
must comply with all of the applicable requirements of this part.
See comment 3(b)-5.
7. Application to extensions secured by mobile homes. Because a
mobile home can be a dwelling under Sec. 1026.2(a)(19), the
exemption in Sec. 1026.3(b) does not apply to a credit extension
secured by a mobile home that is used or expected to be used as the
principal dwelling of the consumer. See comment 3(b)-6.
8. Transition rule for open-end accounts exempt prior to July
21, 2011. Section 1026.3(b)(2) applies only to open-end accounts
opened prior to July 21, 2011. Section 1026.3(b)(2) does not apply
if a security interest is taken by the creditor in real property, or
in personal property used or expected to be used as the consumer's
principal dwelling. If, on July 20, 2011, an open-end account is
exempt under Sec. 1026.3(b) based on a firm commitment to extend
credit in excess of $25,000, the account remains exempt under Sec.
1026.3(b)(2) until December 31, 2011 (unless the firm commitment is
reduced to $25,000 or less). If the firm commitment is increased on
or before December 31, 2011, to an amount in excess of $50,000, the
account remains exempt under Sec. 1026.3(b)(1) regardless of
subsequent increases in the threshold amount as a result of
increases in the CPI-W. If the firm commitment is not increased on
or before December 31, 2011, to an amount in excess of $50,000, the
account ceases to be exempt under Sec. 1026.3(b) based on a firm
commitment to extend credit. For example:
i. Assume that, on July 20, 2011, the account is exempt under
Sec. 1026.3(b) based on the creditor's firm commitment to extend
$30,000 in credit. On November 1, 2011, the creditor increases the
firm commitment on the account to $55,000. In these circumstances,
the account remains exempt under Sec. 1026.3(b)(1) regardless of
subsequent increases in the threshold amount as a result of
increases in the CPI-W.
ii. Same facts as paragraph 8.i of this section except, on
November 1, 2011, the creditor increases the firm commitment on the
account to $40,000. In these circumstances, the account ceases to be
exempt under Sec. 1026.3(b)(2) after December 31, 2011, and the
creditor must begin to comply with the applicable requirements of
this part.
* * * * *
By order of the Board of Governors of the Federal Reserve
System, acting through the Secretary of the Board under delegated
authority.
Benjamin W. McDonough,
Deputy Secretary of the Board.
Brian Shearer,
Assistant Director, Office of Policy Planning and Strategy, Consumer
Financial Protection Bureau.
[FR Doc. 2024-23275 Filed 10-11-24; 8:45 am]
BILLING CODE 6210-01-P; 4810-AM-P
