80 FR 48254 - Loan Guaranty: Adjustable Rate Mortgage Notification Requirements and Look-Back Period
DEPARTMENT OF VETERANS AFFAIRS Federal Register Volume 80, Issue 155 (August 12, 2015)
Federal Register Volume 80, Issue 155 (August 12, 2015)
| Page Range | 48254-48255 | |
| FR Document | 2015-19775 |
[Federal Register Volume 80, Number 155 (Wednesday, August 12, 2015)] [Rules and Regulations] [Pages 48254-48255] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-19775] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF VETERANS AFFAIRS 38 CFR Part 36 RIN 2900-AP25 Loan Guaranty: Adjustable Rate Mortgage Notification Requirements and Look-Back Period AGENCY: Department of Veterans Affairs. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: This document adopts as final, without change, a proposed rule of the Department of Veterans Affairs (VA) to amend its regulations that govern adjustable rate mortgages made in conjunction with the Home Loan Guaranty program. These revisions align VA's disclosure and interest rate adjustment requirements with the implementing regulations of the Truth in Lending Act (TILA), as recently revised by the Consumer Financial Protection Bureau (CFPB). This rulemaking will ensure VA remains consistent with other applicable consumer finance and housing regulations governing adjustable rate mortgages. DATES: Effective Date: This rule is effective September 11, 2015. FOR FURTHER INFORMATION CONTACT: John Bell III, Assistant Director for Loan Policy (262), Veterans Benefits Administration, Department of Veterans Affairs, 810 Vermont Ave. NW., Washington, DC 20420, (202) 632-8786. (This is not a toll-free number.) SUPPLEMENTARY INFORMATION: The January 29, 2015 Proposed Rule On January 29, 2015, VA published a proposed rule in the Federal Register at 80 FR 4812, to revise VA's regulations governing adjustable rate mortgages set forth at 38 CFR 36.4312(d). VA proposed two amendments in this rulemaking to ensure VA regulations remain aligned with TILA and the implementing regulations set forth by the CFPB. First, VA proposed amending 38 CFR 36.4312(d)(6) so that the requirements for the disclosures and notifications that must be provided to borrowers prior to an interest-rate adjustment are cross- referenced to those set forth in the TILA implementing regulations at 12 CFR 1026.20(c) and (d). Second, VA proposed amending 38 CFR 36.4312(d)(2) to require that lenders adjust interest rates based on the most recent interest rate index figure available 45 days prior to the interest rate adjustment, instead of the interest rate index available 30 days prior to the interest rate adjustment, as is currently required in VA's regulations. The public comment period for the proposed rule closed on March 30, 2015. VA received two comments. The comments received on the proposed rule are discussed below. VA adopts without change the proposed rule that revises VA's adjustable rate mortgage regulations at 38 CFR 36.4312(d) to ensure consistency with other Federal agency regulations. VA received one public comment on the proposed rule from a lender who participates in the VA Home Loan program. The commenter expressed support for the rule as written and stated that VA's alignment with CFPB's rules will reduce the regulatory burden [on lenders] and ensure protection for Veterans and Servicemembers. VA received one public comment on the proposed rule from an individual. The commenter stated that a three-year look-back period would be detrimental to veterans and their spouses. The commenter explained that veterans and their spouses currently have a good chance of moving to an assisted living facility of their choice or staying at home with a caregiver, but that with a three-year look-back period, the majority of these individuals will no longer have that choice. The commenter explained that this would result in these veterans relying on Medicaid and going to a facility not of their choosing, which would be more expensive. VA believes the commenter mistook the purpose of VA's proposal, as the term look-back often relates to the period preceding the date that a person applies for Medicaid. VA does not believe this regulatory change has any impact on veterans moving to an assisted living facility, staying with a caregiver, or relying on Medicaid, as the commenter stated. Instead, this change helps ensure VA alignment with other Federal laws and current lender practices with regard to adjustable rate mortgages. See 80 FR 4814. It provides veteran borrowers who have adjustable rate mortgages more advanced notice and detailed disclosures regarding a change in their interest rates, thereby affording them a better opportunity to respond to such changes and stay in their homes. Therefore, VA is adopting the proposed rule without change. Executive Orders 12866 and 13563 Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 12866 (Regulatory Planning and Review) defines a ``significant regulatory action'' requiring review by the Office of Management and Budget (OMB), unless OMB waives such review, as ``any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.'' The economic, interagency, budgetary, legal, and policy implications of this regulatory action have been examined, and it has been determined not to be a significant regulatory action under Executive Order [[Page 48255]] 12866. VA's impact analysis can be found as a supporting document at http://www.regulations.gov, usually within 48 hours after the rulemaking document is published. Additionally, a copy of the rulemaking and its impact analysis are available on VA's Web site at http://www.va.gov/orpm/, by following the link for VA Regulations Published from FY 2004 to FYTD. Unfunded Mandates The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. This final rule will have no such effect on State, local, and tribal governments, or on the private sector. Paperwork Reduction Act Although this document contains a provision constituting a collection of information at 38 CFR 36.4312(d)(6), under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521), no new or proposed revised collections of information are associated with this final rule. The information collection provisions for this final rule are currently approved by OMB and have been assigned OMB control number 3170-0015. Regulatory Flexibility Act The Secretary hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act (5 U.S.C. 601- 612). This rule aligns the disclosure and look-back requirements for adjustable rate mortgages to the revised requirements in the 2013 TILA servicing rule published by the CFPB. VA does not have discretion not to align these requirements with the new TILA requirements established by CFPB and implemented by CFPB in the 2013 TILA servicing rule. The revised disclosure and look-back requirements began applying to VA adjustable rate mortgages in January 2015, regardless of VA action. VA is publishing this rulemaking because it is important for VA regulations to be consistent with TILA and its implementing regulations. In this rule, VA will adopt the minimum 45-day look-back period to clarify that lenders making VA-guaranteed adjustable rate mortgages must meet the TILA minimum notification requirements. As discussed in the preamble to VA's proposed rule, CFPB noted in its rulemaking that the majority of adjustable rate mortgages in the conventional market already have look-back periods of 45 days or longer. 80 FR 4813. Additionally, the revisions to the disclosure requirements simply align VA requirements with the CFPB's 2013 TILA servicing rule and the procedures currently followed in the conventional mortgage lending market. See id. Accordingly, the Secretary certifies that the adoption of this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. Therefore, under 5 U.S.C. 605(b), this rulemaking is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604. Catalog of Federal Domestic Assistance The Catalog of Federal Domestic Assistance number and title for the program affected by this document is 64.114, Veterans Housing-- Guaranteed and Insured Loans. Signing Authority The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Robert L. Nabors II, Chief of Staff, Department of Veterans Affairs, approved this document on August 6, 2015, for publication. List of Subjects in 38 CFR Part 36 Condominiums, Flood insurance, Housing, Indians, Individuals with disabilities, Loan programs--housing and community development, Loan programs--Indians, Loan programs--veterans, Manufactured homes, Mortgage insurance, Reporting and recordkeeping requirements, Veterans. Dated: August 7, 2015. Michael Shores, Chief Impact Analyst, Office of Regulation Policy & Management, Office of the General Counsel, Department of Veterans Affairs. For the reasons set forth in the preamble, VA amends 38 CFR part 36 as follows: PART 36--LOAN GUARANTY 0 1. The authority citation for part 36 continues to read as follows: Authority: 38 U.S.C. 501 and as otherwise noted. 0 2. Amend Sec. 36.4312 by revising paragraphs (d)(2) and (6) and adding an information collection parenthetical to the end of the section to read as follows: Sec. 36.4312 Interest rates. * * * * * (d) * * * (2) Frequency of interest rate changes. Interest rate adjustments must occur on an annual basis, except that the first adjustment may occur no sooner than 36 months from the date of the borrower's first mortgage payment. The adjusted rate will become effective the first day of the month following the adjustment date; the first monthly payment at the new rate will be due on the first day of the following month. To set the new interest rate, the lender will determine the change between the initial (i.e., base) index figure and the current index figure. The initial index figure shall be the most recent figure available before the date of the note. For loans where the date of the note is before January 10, 2015, the current index figure shall be the most recent index figure available 30 days before the date of each interest rate adjustment. For loans where the date of the note is on or after January 10, 2015, the current index figure shall be the most recent index figure available 45 days before the date of each interest rate adjustment. * * * * * (6) Disclosures. The lender must provide the borrower with disclosures in accordance with the timing, content, and format required by the regulations implementing the Truth in Lending Act (15 U.S.C. 1601 et seq.) at 12 CFR 1026.20(c) and (d). A copy of these disclosures will be made a part of the lender's permanent record on the loan. * * * * * (The Office of Management and Budget has approved the information collection requirements in this section under control number 3170- 0015.) [FR Doc. 2015-19775 Filed 8-11-15; 8:45 am] BILLING CODE 8320-01-P
![48254 Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Rules and Regulations
representative. The Captain of the Port Washington, DC 20420, (202) 632–8786. term look-back often relates to the
may be assisted by other Federal, State, (This is not a toll-free number.) period preceding the date that a person
or local agencies with the enforcement SUPPLEMENTARY INFORMATION: applies for Medicaid. VA does not
of the safety zone. believe this regulatory change has any
(c) Authorization. All vessel operators The January 29, 2015 Proposed Rule impact on veterans moving to an
who desire to enter the safety zone must On January 29, 2015, VA published a assisted living facility, staying with a
obtain permission from the Captain of proposed rule in the Federal Register at caregiver, or relying on Medicaid, as the
the Port or Designated Representative by 80 FR 4812, to revise VA’s regulations commenter stated. Instead, this change
contacting either the on-scene patrol governing adjustable rate mortgages set helps ensure VA alignment with other
craft on VHF Ch 13 or Ch 16 or the forth at 38 CFR 36.4312(d). VA Federal laws and current lender
Coast Guard Sector Columbia River proposed two amendments in this practices with regard to adjustable rate
Command Center via telephone at (503) rulemaking to ensure VA regulations mortgages. See 80 FR 4814. It provides
861–6211. remain aligned with TILA and the veteran borrowers who have adjustable
(d) Definitions. As used in this implementing regulations set forth by rate mortgages more advanced notice
section, designated representative the CFPB. First, VA proposed amending and detailed disclosures regarding a
means any Coast Guard commissioned, 38 CFR 36.4312(d)(6) so that the change in their interest rates, thereby
warrant, or petty officer who has been requirements for the disclosures and affording them a better opportunity to
authorized by the Sector Columbia River notifications that must be provided to respond to such changes and stay in
Captain of the Port to assist in enforcing borrowers prior to an interest-rate their homes. Therefore, VA is adopting
the security zones described in adjustment are cross-referenced to those the proposed rule without change.
paragraph (a) of this section. set forth in the TILA implementing
Executive Orders 12866 and 13563
regulations at 12 CFR 1026.20(c) and
Dated: June 23, 2015. Executive Orders 12866 and 13563
(d). Second, VA proposed amending 38
D.J. Travers, CFR 36.4312(d)(2) to require that direct agencies to assess the costs and
Captain, U.S. Coast Guard, Captain of the lenders adjust interest rates based on the benefits of available regulatory
Port, Sector Columbia River. most recent interest rate index figure alternatives and, when regulation is
[FR Doc. 2015–19815 Filed 8–11–15; 8:45 am] available 45 days prior to the interest necessary, to select regulatory
BILLING CODE 9110–04–P rate adjustment, instead of the interest approaches that maximize net benefits
rate index available 30 days prior to the (including potential economic,
interest rate adjustment, as is currently environmental, public health and safety
DEPARTMENT OF VETERANS required in VA’s regulations. effects, and other advantages;
AFFAIRS The public comment period for the distributive impacts; and equity).
proposed rule closed on March 30, Executive Order 13563 (Improving
38 CFR Part 36 2015. VA received two comments. The Regulation and Regulatory Review)
comments received on the proposed emphasizes the importance of
RIN 2900–AP25 rule are discussed below. VA adopts quantifying both costs and benefits,
without change the proposed rule that reducing costs, harmonizing rules, and
Loan Guaranty: Adjustable Rate revises VA’s adjustable rate mortgage promoting flexibility. Executive Order
Mortgage Notification Requirements regulations at 38 CFR 36.4312(d) to 12866 (Regulatory Planning and
and Look-Back Period ensure consistency with other Federal Review) defines a ‘‘significant
AGENCY: Department of Veterans Affairs. agency regulations. regulatory action’’ requiring review by
VA received one public comment on the Office of Management and Budget
ACTION: Final rule.
the proposed rule from a lender who (OMB), unless OMB waives such
SUMMARY: This document adopts as participates in the VA Home Loan review, as ‘‘any regulatory action that is
final, without change, a proposed rule of program. The commenter expressed likely to result in a rule that may: (1)
the Department of Veterans Affairs (VA) support for the rule as written and Have an annual effect on the economy
to amend its regulations that govern stated that VA’s alignment with CFPB’s of $100 million or more or adversely
adjustable rate mortgages made in rules will reduce the regulatory burden affect in a material way the economy, a
conjunction with the Home Loan [on lenders] and ensure protection for sector of the economy, productivity,
Guaranty program. These revisions align Veterans and Servicemembers. competition, jobs, the environment,
VA’s disclosure and interest rate VA received one public comment on public health or safety, or State, local,
adjustment requirements with the the proposed rule from an individual. or tribal governments or communities;
implementing regulations of the Truth The commenter stated that a three-year (2) Create a serious inconsistency or
in Lending Act (TILA), as recently look-back period would be detrimental otherwise interfere with an action taken
revised by the Consumer Financial to veterans and their spouses. The or planned by another agency; (3)
Protection Bureau (CFPB). This commenter explained that veterans and Materially alter the budgetary impact of
rulemaking will ensure VA remains their spouses currently have a good entitlements, grants, user fees, or loan
consistent with other applicable chance of moving to an assisted living programs or the rights and obligations of
consumer finance and housing facility of their choice or staying at recipients thereof; or (4) Raise novel
regulations governing adjustable rate home with a caregiver, but that with a legal or policy issues arising out of legal
mortgages. three-year look-back period, the mandates, the President’s priorities, or
majority of these individuals will no the principles set forth in this Executive
mstockstill on DSK4VPTVN1PROD with RULES
DATES: Effective Date: This rule is longer have that choice. The commenter Order.’’
effective September 11, 2015. explained that this would result in these The economic, interagency,
FOR FURTHER INFORMATION CONTACT: John veterans relying on Medicaid and going budgetary, legal, and policy
Bell III, Assistant Director for Loan to a facility not of their choosing, which implications of this regulatory action
Policy (262), Veterans Benefits would be more expensive. have been examined, and it has been
Administration, Department of Veterans VA believes the commenter mistook determined not to be a significant
Affairs, 810 Vermont Ave. NW., the purpose of VA’s proposal, as the regulatory action under Executive Order
VerDate Sep<11>2014 18:35 Aug 11, 2015 Jkt 235001 PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 E:\FR\FM\12AUR1.SGM 12AUR1](https://thefederalregister.org/doc/80_FR_48409/page/1.svg)
![Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Rules and Regulations 48255
12866. VA’s impact analysis can be preamble to VA’s proposed rule, CFPB information collection parenthetical to
found as a supporting document at noted in its rulemaking that the majority the end of the section to read as follows:
http://www.regulations.gov, usually of adjustable rate mortgages in the
within 48 hours after the rulemaking conventional market already have look- § 36.4312 Interest rates.
document is published. Additionally, a back periods of 45 days or longer. 80 FR * * * * *
copy of the rulemaking and its impact 4813. Additionally, the revisions to the (d) * * *
analysis are available on VA’s Web site disclosure requirements simply align (2) Frequency of interest rate changes.
at http://www.va.gov/orpm/, by VA requirements with the CFPB’s 2013 Interest rate adjustments must occur on
following the link for VA Regulations TILA servicing rule and the procedures an annual basis, except that the first
Published from FY 2004 to FYTD. currently followed in the conventional adjustment may occur no sooner than 36
mortgage lending market. See id. months from the date of the borrower’s
Unfunded Mandates first mortgage payment. The adjusted
Accordingly, the Secretary certifies
The Unfunded Mandates Reform Act that the adoption of this final rule will rate will become effective the first day
of 1995 requires, at 2 U.S.C. 1532, that not have a significant economic impact of the month following the adjustment
agencies prepare an assessment of on a substantial number of small entities date; the first monthly payment at the
anticipated costs and benefits before as they are defined in the Regulatory new rate will be due on the first day of
issuing any rule that may result in Flexibility Act, 5 U.S.C. 601–612. the following month. To set the new
expenditure by State, local, and tribal Therefore, under 5 U.S.C. 605(b), this interest rate, the lender will determine
governments, in the aggregate, or by the rulemaking is exempt from the initial the change between the initial (i.e., base)
private sector, of $100 million or more and final regulatory flexibility analysis index figure and the current index
(adjusted annually for inflation) in any requirements of sections 603 and 604. figure. The initial index figure shall be
one year. This final rule will have no the most recent figure available before
such effect on State, local, and tribal Catalog of Federal Domestic Assistance the date of the note. For loans where the
governments, or on the private sector. The Catalog of Federal Domestic date of the note is before January 10,
Assistance number and title for the 2015, the current index figure shall be
Paperwork Reduction Act
program affected by this document is the most recent index figure available 30
Although this document contains a 64.114, Veterans Housing—Guaranteed days before the date of each interest rate
provision constituting a collection of and Insured Loans. adjustment. For loans where the date of
information at 38 CFR 36.4312(d)(6), the note is on or after January 10, 2015,
under the Paperwork Reduction Act of Signing Authority the current index figure shall be the
1995 (44 U.S.C. 3501–3521), no new or The Secretary of Veterans Affairs, or most recent index figure available 45
proposed revised collections of designee, approved this document and days before the date of each interest rate
information are associated with this authorized the undersigned to sign and adjustment.
final rule. The information collection submit the document to the Office of the * * * * *
provisions for this final rule are Federal Register for publication (6) Disclosures. The lender must
currently approved by OMB and have electronically as an official document of provide the borrower with disclosures
been assigned OMB control number the Department of Veterans Affairs. in accordance with the timing, content,
3170–0015. Robert L. Nabors II, Chief of Staff, and format required by the regulations
Regulatory Flexibility Act Department of Veterans Affairs, implementing the Truth in Lending Act
approved this document on August 6, (15 U.S.C. 1601 et seq.) at 12 CFR
The Secretary hereby certifies that 2015, for publication.
this final rule will not have a significant 1026.20(c) and (d). A copy of these
economic impact on a substantial List of Subjects in 38 CFR Part 36 disclosures will be made a part of the
number of small entities as they are lender’s permanent record on the loan.
Condominiums, Flood insurance,
defined in the Regulatory Flexibility Act Housing, Indians, Individuals with * * * * *
(5 U.S.C. 601–612). (The Office of Management and Budget has
disabilities, Loan programs—housing approved the information collection
This rule aligns the disclosure and and community development, Loan requirements in this section under control
look-back requirements for adjustable programs—Indians, Loan programs— number 3170–0015.)
rate mortgages to the revised veterans, Manufactured homes, [FR Doc. 2015–19775 Filed 8–11–15; 8:45 am]
requirements in the 2013 TILA servicing Mortgage insurance, Reporting and
rule published by the CFPB. VA does BILLING CODE 8320–01–P
recordkeeping requirements, Veterans.
not have discretion not to align these
Dated: August 7, 2015.
requirements with the new TILA
requirements established by CFPB and Michael Shores, ENVIRONMENTAL PROTECTION
implemented by CFPB in the 2013 TILA Chief Impact Analyst, Office of Regulation AGENCY
servicing rule. The revised disclosure Policy & Management, Office of the General
Counsel, Department of Veterans Affairs. 40 CFR Part 52
and look-back requirements began
applying to VA adjustable rate For the reasons set forth in the [EPA–R04–OAR–2015–0177; FRL–9932–30–
mortgages in January 2015, regardless of preamble, VA amends 38 CFR part 36 as Region 4]
VA action. VA is publishing this follows:
rulemaking because it is important for Approval and Promulgation of
VA regulations to be consistent with PART 36—LOAN GUARANTY Implementation Plans; Alabama,
mstockstill on DSK4VPTVN1PROD with RULES
TILA and its implementing regulations. Mississippi and South Carolina;
■ 1. The authority citation for part 36 Certain Visibility Requirements for the
In this rule, VA will adopt the minimum
continues to read as follows: 2008 Ozone Standards
45-day look-back period to clarify that
lenders making VA-guaranteed Authority: 38 U.S.C. 501 and as otherwise
noted. AGENCY: Environmental Protection
adjustable rate mortgages must meet the Agency.
TILA minimum notification ■ 2. Amend § 36.4312 by revising
ACTION: Direct final rule.
requirements. As discussed in the paragraphs (d)(2) and (6) and adding an
VerDate Sep<11>2014 18:35 Aug 11, 2015 Jkt 235001 PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 E:\FR\FM\12AUR1.SGM 12AUR1](https://thefederalregister.org/doc/80_FR_48409/page/2.svg)
Document Created: 2016-09-27 22:27:10
Document Modified: 2016-09-27 22:27:10
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Contact | John Bell III, Assistant Director for Loan Policy (262), Veterans Benefits Administration, Department of Veterans Affairs, 810 Vermont Ave. NW., Washington, DC 20420, (202) 632-8786. (This is not a toll-free number.) | |
| FR Citation | 80 FR 48254 | |
| RIN Number | 2900-AP25 | |
| CFR Associated | Condominiums; Flood Insurance; Housing; Indians; Individuals with Disabilities; Loan Programs-Housing and Community Development; Loan Programs-Indians; Loan Programs-Veterans; Manufactured Homes; Mortgage Insurance; Reporting and Recordkeeping Requirements and Veterans |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR